Leaders in Supply Chain and Logistics with Radu Palamariu

#55: Michael Byrne Managing Director of Toll Group

September 25, 2019 Season 1 Episode 55
Leaders in Supply Chain and Logistics with Radu Palamariu
#55: Michael Byrne Managing Director of Toll Group
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Leaders in Supply Chain and Logistics with Radu Palamariu
#55: Michael Byrne Managing Director of Toll Group
Sep 25, 2019 Season 1 Episode 55
Radu Palamariu
Michael has a 30-year career in executive positions both in Australia and internationally in the logistics, supply chain, retail and property sectors.
Show Notes Transcript

Michael has a 30-year career in executive positions both in Australia and internationally in the logistics, supply chain, retail and property sectors. Previous roles include Chief Executive Officer of Coates Hire, Linfox and Westgate Holdings, as well as Non-Executive Director of Australia Post.

Discover more details here.

Some of the highlights of the episode:

  • Toll reorganization, impact on their financial situation and future outlook
  • The $265 million investment in Toll City – one of Toll’s biggest projects
  • Toll for sale – a rumor or a fact?
  • How is Toll changing its tech infrastructure layer
  • How have clients changed their expectations of their 3PL
  • Environment and instant gratification
  • “I think we need to employ and engage people through different avenues and we need younger people in our business.”

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Speaker 1:
0:00
Hello and welcome to the leaders in supply chain podcast. I'm your host Radu Palamariu, Managing Director of Alcott Global. Our mission is to connect them to connect you to the supply chain ecosystem in Asia and globally by bringing forward the most interesting leaders in the industry. And todatoiy I'm very happy to have with us Michael Byrne, who the MD and CEO of toll group. Michael has a 13 year career in executive positions both in Australia and internationally in the logistics supply chain, retail and property sectors. Previous roles include chiefs, chief executive officer of coats, higher and Linfox and Westgate holdings as well as the non executive director of Australia. Post tall has over 125 years of experience and operates an extensive global logistics network across 1,200 locations and more than 50 countries with 40,000 employees. They provide the diverse range of transport and logistics solutions covering the road, air, sea, and rail. And on 28 May, 2015 tall formerly became a division of Japan Post. Michael, pleasure to have you with us today and thanks for taking the time.
Speaker 2:
1:04
All right. Good morning. Good afternoon. Good evening. Depending on where you're listening from, it's a pleasure to be here.
Speaker 1:
1:09
Super. And let's, let's start maybe with the question, uh, around Japan Post and since the purchase of Japan Post, you have gone on a couple of bold core new strategies that that tool has implemented. You went from five divisions in 24 business units to now three divisions and 11 units. What do you sense has been achieved so far?
Speaker 2:
1:30
Well, I think first of all, that time has flown. It's, it's nearly impossible for me to comprehend that I'm coming up to the end of my third year already. It's gone in a blink. Um, and nowadays if people have followed it since 2015 and in 2006, seven times a totals had described difficulties there. And in 17 with a change of chairman John Mellon, change of the board and then more appointment, we brought the business in the relief six dimensions and we're working through those six dimensions, uh, safety, uh, being a core dimension for us because of the things that we do. We can't uranium, explosives, munitions, Audrey and nitrogen. Uh, we can't like the spikes on the things we do. We could up what they of suburbs as I side. Uh, our customer service NPS scores, we need to, to focus a lot on changing, uh, engagement with our customers.
Speaker 2:
2:30
And that was for some of the reasons of the changes that the structure, uh, cause customers said we were far too complex. They had to deal with 10 business units. So four or five divisions and global MNCs didn't want to do that. Um, projects, we've had some massive projects which have been, uh, we'll document and one of them here, uh, tall city, $265 million investment. We've had about six major projects to bring to our conclusion. Uh, Hi Cha, 45,000 people at the moment in the 50 countries and has people now with close six, so seven countries. We've had to worry that our attrition rights and particularly Nigeria attrition rights are being very, very high. I'm messy ball. I'd take program, um, to upgrade our systems. And that came about through the 113 acquisitions. I have a full Chinese and then financial. So if you look at the, the dimensions, four of the dimensions and I'm on the way to Tokyo again tonight for a board meeting, um, four of our dimensions, I'll give us a rule grain ticked and uh, signed up businesses done really well. I'd give us a watch and see on some of our to still roll outs and the, we're not doing well enough on their financials so we still need to be better, um, across the whole dimensions of the business. She can't look at business in one dimensional family. Uh, we have to look at it across all the things we need to do to Micah and extremely successful and long enduring business. Cause we're already 125 years old
Speaker 1:
4:04
and, and kind of building upon the holistic view of a, of a business, which unfortunately a lot of people don't typically take. And they, they focus as they zero in. And we as human beings typically are, uh, negative, uh, focused or, or kind of, um, a more prone to, to bring that out. And to ask you a little bit in terms of the biggest struggles in this process, because usually change comes with struggles, um, not a process that people enjoy. And it also brings, um, a lot of difficulties in this process. Maybe you can share a little bit some of the challenges that you've faced, how you've overcome it and obviously you're still working on some of them.
Speaker 2:
4:45
Oh, we'll be working on friendly things forever. It's evolution. Um, that change is now constant. People talk about transformation or I just think that that's nearly a useless term now because of the world business, the economy, globalization, politics are changing every moment at such a rapid rate and in an unpredictable format, the thing that you're going to transform to something and stop is a nonsensical, illogical argument. We must now evolve constantly to how the world is changing constantly. Um, who would have thought, uh, that to be a drone, a tank, and they could wipe out the 5% of the world's fuel, probably for less than $2 million of eminence. So Ordinance. Yes. Unbelievable. So I think that we, we can actually get to some place and then stop is not not relevant. Um, it's a been a very challenging time. Um, from a Japan post point of view, 2007, I had to write off five, nearly $5 billion.
Speaker 2:
5:56
I'm sure that was enormously, um, tall. Although our work force isn't nearly the same as it will as we have left guy. 3000 people bought closing like countries by being growing in others now, um, told us had to look deeply into itself into that, uh, obese of our problems. And we had serious problems in AA. Now in some parts of the world on out customer service, uh, my customers stayed and they invited with their fleet, their service levels weren't good enough. How do I fought to good enough? We had some real safety issues around the wheel, um, which were very challenging for us. You know, I liked a lot of really big global companies. We had regulatory issues, um, which share all the big logistics companies that will have all had them. So it's been very challenging. It's been, uh, very confronting for a lot of people.
Speaker 2:
6:53
What hasn't we did though is that there is an enormous amount of people I told who are unbelievably passionate about the green color, the by a passionate and deeply care and want to do the right thing by tall. Um, a lot of people we're very beat up about what happened, not that rotting off $5 billion and some of the other issues, but there is a deep level of passion amongst the workforce to be better at that. I had been challenged. Um, I think we'll continue to be challenged. I think, uh, I think we might be in for a low growth environment next year. We've, uh, we've been having full 1.5 to 6.4% growth [inaudible] organic across the world, which is probably not too bad. Um, that we're seeing that really doe off some of the countries at the moment and a stand to ones and twos and it's a different business.
Speaker 2:
7:54
Again, when you're growing at 6% and trying to implement change, then try to implement change when you're only growing at 1%. So I gave him, we'll have to stay doing ourselves about what we need to do differently. Um, I think a lot of our people are a little side challenged, as many people are on how quickly the world is changing every day. I think that people constantly look for predictability on the external environment. Well, how do you predict Boris Johnson? H how do you predict what happened in Saudi on the weekend? Perry predict, uh, changes in India with Modi and what he did with changing really pass it the constitution. And I think that's the challenge for paper paperwork, predictability. And I'm not sure as a lady you can get that to them anymore. Yeah. Probably the only predictability is the changes. The constant,
Speaker 1:
8:57
like you rightfully said, wanting to, to bring the topic of discussion on and you had the financial results that came out were in great, like, like you mentioned some challenges there on the longer term, what do you see as your path to profitability? Are there certain, uh, narratives or directions that will ensure that, what's your view on that?
Speaker 2:
9:18
So first of all, 2007, nine, we took that large toilet off. Um, and that wasn't, that was all so real money, cash and goodwill and payments and other challenges. And um, I turned that the trajectory started changing quickly driven by fast growing revenue and we saw a really strong revenue growth in Asia, uh, seven, eight, nine, 10, 11, the saint companion Grice rights in Asia, probably on the [inaudible] basics of some of the foundational investments put in place and then a really big turn around in their Chinese business and the management gave a a fantastic jump day. It not only to lean again, really good revenue growth around the world in all countries by New Zealand. And uh, the team around the world did a fantastic job because I got every country in Asia to profitability 20 the a that we're in now and our first quarter results are very, very disappointing.
Speaker 2:
10:23
It, you do have to want appeal them a little bit. There is some abnormals in there again to close at the last of our longstanding regulatory issues. Um, but in the mind, they've not in the mind, they have now all been done. So we can't use them going forward as a, an excuse for performance l l level of profitability and returns going forward with must be on easing the capital and the infrastructure and the architecture that's been designed talk told it was a bit of a different beast. Um, it's asset s and heavy. Uh, now what does that mean? We had 16,000 of our own company trucks around the world and if you are doing the military and you are doing munitions and you're doing hydrogen nitrogen, you're cutting uranium, you can't outsource that to a subcontract that people don't like you do that. Um, and there has been enormous investments going to really be places of infrastructure. Architecture totals, city tops. He up over 600 million, um, damp, your supply price in the northwest shelf that that is assets and they have to be used harder. This is not a bad pay. Pouring more capital into tar with Japan and put nearly $2 billion into total since I've been here.
Speaker 2:
11:49
And we need to come to a position where we use and utilize and draw of deem [inaudible] capital that's already been deployed. Now some of that is ketchup capital from a couple of years of underinvestment. Um, set the first level of productivity is use the ease, the infrastructure and architecture that explained bill, stop building more toys, uh, to be much more disciplined about the countries that would blind to and where we're in 52 countries. I think we're in the process of closing out based on north country. Some of those countries are absolute combat science, Afghanistan, uh, the Congo, et cetera. Some other countries. My personal view is we shouldn't have [inaudible] that's are often made to say in hindsight, um, we fill out the UN a lot of times and, and people did a fantastic job. This is nothing else I hear is about, uh, being negative about the past and, and the management.
Speaker 2:
12:54
I might, their decisions in that tone five in that lens that they had in the time. But I don't think that's fast. I get at the moment, I think we need to fight this to all the countries. We can be really good at. 52 should be enough for us. Um, use the capital that we've already deployed and they are more deep plane guides with some of our customers. We have some amazing customers here. Um, a lot of fortune 500 to that who really, uh, assist us and help us. And then they plan guides with us. Uh, we needed to be more focused. I think we lost stairway and became very, uh, very omnifocus business. I think the other thing then I would say what's the pathway that profit comes consistent and sustainable profitability. I don't think we're valued the men and women here enough. I have for a long period of time and that to run some of the assets we have, you need unbelievably high quality people.
Speaker 2:
14:00
We run it, we run a ambulance rescue service. Uh, in New South Wales we have choppers and paramedics and doctors and people that jump out of helicopters and we have engineers and mathematicians and PhDs and we run pipelines and boats and landing craft. Um, the capability of the people here is unbelievable. I just don't think we've valued it enough and the needs laid stability. And now it's contradiction to what I said before that we've let go 3000 people in some ways, but we need the fact that smaller on the talent we have and, and allowing that talent to really breathe more. And that's a difficult thing to do.
Speaker 1:
14:41
And I'll, I'll, I'll talk and I'll ask you about the elephant in the room because there's been a lot of, and we just need to get it out there. Um, in the for, for everybody's, um, you know, inflammation. There's been a lot of rumors here and there about, um, told being potentially put out for sale, not very clear on what's happening and just to kind of clear the air. What's your, you know, what would be your reply to that?
Speaker 2:
15:05
Well, there's lots of rumors, myths, and a conjecture on everything every day. Um, oh, 54. I'm not 64 over further. There'd be one. I'm much younger than people think that, but I've been around forever. Um, there's no doubt people have, there's lots of people. My competitors who I know after this long in the business who ring me and say, can we buy this business? Can we buy this business? And my first two and a half years, there wouldn't have been a core to go by where someone didn't ring me as an MD saying, can I buy this? Can I blood that is this style, I want to buy it. How much do you want my ed? My answer, simple there. I've had no direction. No Man died. And now instruction from Japan Post to sell anything. Uh, every time that someone showing me I said nothing is for sale. Um, lost my job. I was given a very clear instruction from the Gato sign, uh, in 2017. I see him again on Thursday and fix it and hurry, uh, was, he's instruction too. I think he would say I'm not hurrying enough to fix it. Uh,
Speaker 1:
16:18
or change takes time. Depends. Yeah. [inaudible] this too. Yeah.
Speaker 3:
16:24
Okay.
Speaker 2:
16:25
Look, oh, Japan Post that never said anything to me about selling any of the businesses. Um, they've asked me not to.
Speaker 3:
16:34
So
Speaker 2:
16:36
there they are. They're a longterm owner. Um, they've, and this is 2015, I would say that they're disappointed with that. Look, one of the dimensions, the financial evidence as far as all in now at the instructions of these to begin to sell nothing and to fix it. We have closed some countries. Um, those I didn't think I could fix them and I don't want to be there. Um, there are some product lines longterm that we might not, that the heavily is committed to
Speaker 3:
17:07
[inaudible]
Speaker 2:
17:08
long, long term. Do I want to be in bar, be barging around the world? Probably not. There are some products like that, but uh, I don't think that I'll keep investing in the longterm. So it's about reshaping the business constantly.
Speaker 3:
17:27
[inaudible]
Speaker 2:
17:28
Japan Post Holdings will make their own decisions about, I don't know of other things [inaudible] does. I will say, I see that a, if you ever want to sell a thing, you've got to have it in a position to do that. And I want to think we're there yet anyway. Hmm. Hmm. And moving
Speaker 1:
17:47
on the commercial side, you mentioned clients have 35th 37,000 customers. You have big retailers, you have the Woolworths and Coles, which are your supermarkets in Australia. You also work with the Singapore government. For example, here in Singapore. We are recording this, most of them, if not all of them because we are consumers ourselves, have high expectations today than they had yesterday. So can you tell us a little bit what's the most important demands that they have and how you're trying to address it as tools? So I'd have to
Speaker 2:
18:18
that question up and I'm not allowed to use one of the jokes that I usually have here because I'll be in trouble. Um, I'll break the customers into two groups. You fly, mind 210 spend 4.5 billion. So there really begin to town [inaudible] please. The chevrons, the ExxonMobil's, the Rayos, the FMG is the Woolworths, the [inaudible] Lake is all that way have because sick that in the world, which people don't understand, don't think he's defense.
Speaker 1:
18:49
You're right. Yeah. Most people wouldn't order yet.
Speaker 2:
18:52
When people say you're an FMC jewelry trialing business, I've got years, but the biggest single category, he was defense and defense related products and that the summarizing what the men and limited do they and then we have 36,790 customers through a 4.5 billion. The first two, not the first ones, the first 210 the resigning one discussion that happens at MD level and it's depending on who it is, I'd say the three questions or for one side for a few people. The first question is only about safety. Uh, maligning defense, oil and gas is always second. And then there's three questions that going out of particular world out there. How can you hope they convert more like inventory more quickly to cash to reduce the working capital and more balance sheet that I can name this more in changing my business to be more amenable to the future native consumers.
Speaker 2:
19:51
I [inaudible] what IT do you have to do a three, do you have the intellectual capability of your own people to do I through Billy? So it is the first question from the first 210 east, only about nearly the balance sheet. Excellent. The other 36,790 I just want my product now and I don't want to pay for it. So it's about immediacy, it's about I've seen something I wanted, I want to touch it, I want to feel it and I don't want to pay for it. And I wanted a, even if it's not true, I want it to be dressed up as free delivery. Yes. I think the segmentation is really, really different. But really even the first one is about giving customers something different by releasing the strength of the balance sheet. The only way you can do those things, there is only, certainly, two ways So usually two things. Do all of those. You need very sophisticated IT and then you need very sophisticated people who can use it and then cut the data. So the customers are driving a relentless game to be more efficient with the balance sheets. And then the consumers are driving a relentless game for immediacy.
Speaker 1:
21:09
I mean e-commerce is pretty much has pretty much or is still teaching all of us as consumers and consumers to expect immediate, fast, cheap or you know, I mean we live in an almost a la La land of immediate gratification type of behavior.
Speaker 2:
21:26
I'm not allowed to use that word. I get in trouble but I agree with you. Yeah,
Speaker 1:
21:31
there you go. I said nobody will come off to me hopefully. Um, but it is true and that that consumer is driving also the ultimate customers of toll which are in your manufacturers and your businesses producing the goods. I want to go into the IT part because it and tech in general and you know we hear digital.
Speaker 2:
21:50
No. Did you before you did that, could I just unpeel that other question a little bit of I fall in the fall, ended it. Amazing discussion on the immediacy. So gratification issue because predominantly that's is coming from people who are having, they had disposable income now have more and more disposable income in a lot of cases by then actually have less talk. And you see that in Western world where people have dropped out of sport or they've dropped out of communities or they've dropped out of religion or they dropped out of those community engagement, which took up a lot of time. But I believe I have listed them but then a lot of people, those people also who are well educated, more disposable income actually have more torn believe in things really strong way. Like a child though as well about the environment and they are a social responsibility.
Speaker 2:
22:41
So paypal, paypal is as this push guys from immediacy is push guys for self gratification and then they have higher levels of disposable income, better educated, more worldly. And I, we talk a lot about social responsibility and we talk a lot about our time environment. Would you agree with that? Yes. I decided then that, oh we'll order something from Milan on a Thursday that we see in a catalog that someone wants to wear on a Saturday night and they order it, not realizing it's come by applying. And it just been a whole lot of ab guests to get it. So all the discussion about the environment is not really that in Goram and because the self-gratification and the immediacy over rules, which I think is a fantastic argument, they haven't. Then I think the second thing is, which is interesting, there's no doubt which should or should be at the front of forethought is social responsibility.
Speaker 2:
23:38
Whether it's deliverer, whether it's for the era, whether it's the age six, etc. Etc. Men and women in a lot of western countries are, we see their countries are only only, only foldable $6 an hour by doing that. So if you order a block of chocolate from the supermarket and it costs five bucks and someone delivers it to you for five bucks, it costs team. A person might only do three deliveries in AI. If they're doing single, they're earning a couple of bucks a day on the sexual responsibility drop stay at as well. Which was a really important thing for us to think about how we design one supply challenge in the future about the environment and social responsibility.
Speaker 1:
24:19
That's an excellent point. And I'm kind of linking it to the earlier point of do we think as a, as the whole picture or do we think in pockets? If then I'm link to that, isn't that right? Because yeah, we want sustainability and we want to act responsibly, but we're kind of missing the point of how are things happening at the back end. You're just, you know, in our black box or not. Yeah. I mean, yeah, the product is manufactured sustainably. I don't really think of how is it transported to me. So, um, so there's, there's missing points and, and of course also depending on the country because one thing, yes, in the Western world, in Australia, in, in developing economies is one, then you have economies in Southeast Asia where there's a different dynamics and there's a lot of immediacy. It's probably much less than than, than a few bucks per hour in terms of the delivery. And then it still, it boils down to the systems and the it because it, and tech and digital can make things better through algorithms, through whatever optimizations through, we can get more effective. We can get more productive without deliveries. So I wanted to bring that topic to, to toll into what have you done and implemented or trying to do and trying to implement in told to have that it and technology led to enable you to better serve your plans.
Speaker 2:
25:31
So, uh, a difficult question and I'm at journey. Uh, like most things are. Um,
Speaker 3:
25:42
okay.
Speaker 2:
25:42
The F the first big, the first big piece of IT, Foundational stone. So we're doing, we're doing nine foundational stones, um, which we, the very first one we started was a cyber security, um, to play blind, uh, might not be sexy. Um,
Speaker 2:
26:07
but if, if your biggest sector is defense and NXP, one of your biggest sectors is oil and guests and mourning. And then another big sector, they'd get heavies, health and, uh, drugs. Um, so the security and your penetration levels, uh, app, they're important. And, and we had two in similar lane, put a really big foundational lair into protection and then obviously through GDPR, uh, and changes around the world on privacy, um, with a lot of information in there now express businesses on individuals. Um, a lot of effort has, if at all in blood, sweat and tears has gone into cyber security and that foundational stone and people, people want to talk about all the sexy things. Um, sometimes we also need to talk about foundational starts. So
Speaker 3:
27:12
No.
Speaker 2:
27:14
So cyber security protection, penetration levels are really putting big trust and that finishes, which we'll never finish, but that project finishes next month. Um, and that'll take us to a different levels around the world. Um, we then have nine deep into a reorganizing and reshaping our architecture and infrastructure. Konrad, the nine acquisitions or whatever the number is, or he, lots of different numbers, uh, is my data architecture and core infrastructure very complex. So we're buying on the warning that and upgrading that around the world. Um, and that has had its challenges. 657 systems in Tulsa, uh, whereby did commissioning, very commissioning, re-positioning, upgrading.
Speaker 2:
28:08
We've had to do what we have done, a really big health system, a 45,000 people in 52 countries and a lot of requirements on us. So they have to Judy k China responsibility, uh, managing our people. 16,000 vehicles ar uplines. So a lot of the things we've been doing have been foundational building blocks, um, to run the architecture, run the infrastructure around the heavy assets that we have and protect our customers. Um, customer facing, um, Mulatto, uh, Abby portal. Um, originally going to be built for AYP Daz and uses a dye on. I still, I heard there's 121,000 users a day on it.
Speaker 3:
28:55
Um,
Speaker 2:
28:57
two years ago, two years ago, basically no one in our express business could put an order in electronically. 400 Dales and people awakened, uh, load up electronically.
Speaker 3:
29:11
Um,
Speaker 2:
29:13
still look to do there to make that the high levels of functionality. Uh, oracle are going to uh, want to stay in the y working. I have 153.8 systems here and we just turned off 50. That has been a challenge since the 6th of May. It's not working exactly where we wanted to be. Um, and we were in release two of that. So a lot of foundational blocks, cyber security out to take shell. I'll record global financial transformation. I heal system for our people, a big wolf system, uh, for our boats.
Speaker 3:
29:52
So
Speaker 2:
29:54
today I have 14,000 handheld units. I mean a woman will have gone paperless, a telephone, a camera, someone on glass and work shape and everything in the handheld. Uh, my tall is the uh, the customer facing portal, which has had great acceptance and commentary back that they still want more customers and want more functionality, more functionality.
Speaker 1:
30:20
They will never be [inaudible]. Yes, he was. Yeah.
Speaker 2:
30:26
W what is, what is a parent is that customers for whatever reason, and I don't necessarily understand or agree, customers want an enormous amount of data themselves for the most infanticial only small thing that they're getting delivered. Well, why do you need to track a pair of shoes? It's being delivered to you and it says it's going to be there between two and four or three and four. I don't know why you need to be able to track that as long as your service offer is that it will be there between three and four.
Speaker 3:
31:09
Okay.
Speaker 2:
31:10
That is the hard thing where people want you to track and give them real Toll, real estimation on a parcle that in the mind in some ways has no significance excepted. The person is personally attached to that.
Speaker 3:
31:25
Cool.
Speaker 2:
31:28
The theme that the OT to go with that is usually more expensive than the theme
Speaker 1:
31:39
[inaudible] until headache to implemented.
Speaker 2:
31:42
But I don't think that then that goes again to what people want in their life. More control. [inaudible] actually in know, you know, world where people feel have less control, politics, the economy, globalization, they've lost that sense of control and predictability. They're pushed that level of control into what they can control, which is a purchase
Speaker 1:
32:13
I wanted to go even. So these are fundamental building blocks. And look, I just to build upon that because I have, I, I've literally come from Manila and um, and we attended the conference and there was a lot of buzzwords there. It was about HR that, that conference. But when I attend supply chain conferences, there's other bars word, actually it's, it's interestingly not typically the buzzwords at the same. We've reached a stage I feel with the buzz was at the same uh, namely AI, artificial intelligence, machine learning, blockchain. Okay. IoT. Luckily in the hrs field, there's not, not yet there, but in the industrial field is there. So there's a bunch of buzz words that are being thrown around, but fundamentally 99% of the companies are struggling with fundamentals. Like they still run their business on excel. Nothing wrong with excel actually for, for a lot of cases, nothing wrong with excel.
Speaker 1:
33:06
But I'm just saying that to your point and to the point of a lot of companies, the fundamentals are there, but you're dreaming about AI or you are dreaming about why. I mean, yes, it's sexy to talk about it, but it's not practical to apply it to your business. So I feel, and I have a strong sense that a lot of organizations are struggling with it and they're not making this, technology's practical enough for them. And sometimes they don't need it in the first place. But the point of my question and I kind of had a long introduction to it, I wanted to ask you because you are assets based company and you have a number of assets and also to the point that a lot of people want traceability and all of that, but if you have data on the moments, you can also apply algorithms to it and you can drive value out of that. So I wanted to ask if you're planning to do something, you're already doing something in that, in that realm of um, extracting data, applying some machine learning on top of that, maybe for the express division in that realm. If you have any sort of projects potentially planned,
Speaker 2:
34:06
tell him I'm smiling that people can't see me, but I'm smiling. I'm Jocelyn agree more I think that people want to talk about,
Speaker 3:
34:19
yeah, update.
Speaker 2:
34:22
Um, I want to talk about things like autonomous driving and back down. Understand the five phases of it. People don't want to talk about autonomous driving, but then understand that that curvature of roads and came visit actually pint at the my middle child will live come all these really smart young people who will do that and people want to talk about AI and machine learning, et cetera. Magnificent
Speaker 3:
34:52
[inaudible].
Speaker 2:
34:52
But if you don't have solid this secure and you don't protect everyone's data, which would say much more cool one and look at some of the big issues that have happened in logistics in the last call of ease.
Speaker 1:
35:03
Let's not name the biggest shipping line in the world, but that is not the only one. Not It's not. Yeah.
Speaker 2:
35:11
You think about the really messy issues around the world and thinking about what happened with electronic work doors on the 1st of April, 2019 in the US, when the government changed all the states have the electronic book or reads on the dime, rights went up for like six days the same because people were breaking fatigue rules and breaking laws and too many fatalities, et cetera. The logistics industry do those simple things. Well, cyber security, electronic work. Doerries who China responsibility around the world. Look at, look at things like sanctions, trading with countries, all three ports. All of us have had issues around whether it's a FAQ or sanctions breaches, et Cetera, et cetera. Look at all the Big Cup, every big company, the top 10. So because we haven't been able, we find we can track everything but we don't know how everything is moved. So I think that um, the biggest supply channel logistics companies still need to focus on as much or more and foundational building blocks to get things rod in the future.
Speaker 2:
36:20
If you have all these really smart things, they're not going to work unless the foundations are there anyway and he can't do the really broad sexy things unless you've done the foundations, the type that from where you took that, which I liked very much. If you do the foundations for like you will be able to more wine and have the data. You can't more than harvest the data from 156 finance systems. You can't mind harvest the data if he's still running like lots of us, 30 countries, 24 countries on different highchair platforms. He cannot harvest the data and look for patterns of behavior. Unless a lot of your systems that are integrated cause eh, or the tone weeklies, stripe it all when it's too old. It must must've come through automation of integration of the systems with the minimalist approach to interface because every interface is going to slow it down on likable, complex, and boring, unstable.
Speaker 2:
37:30
So where we want to get to is to be able to mine and harvest the data. The data in itself one day will be worth more as we know, than actual the physical execution of the activity because the truck is an inanimate object, it's a piece of steel or aluminum or whatever it's made of carbon fiber these days, et Cetera, et cetera. In itself, it's worth nothing. Where we have to really focus as supply chain companies is about how we understand the patterns out of the data and then construct supply chains to react more in a more malleable way to the outcomes of the data. Yeah, the fact that is our longterm plan. But that'll probably be something that's uh, done well after my retirement. But I'm here to build the foundation.
Speaker 4:
38:25
We haven't touched upon trade war. We are in the middle of of one. Um, potentially let's see, Brexit that that might impact if it finally does happen at the beginning of October.
Speaker 1:
38:37
But there is there definitely softer trade volumes right now. There's new entrance everywhere. Question that we got in your view on the freight market side was the future if any of air ocean volumes going up, down, how do you stay and navigate this ocean of uncertainty? Really?
Speaker 2:
38:56
So I understand the question but don't understand Wally. He today on, on that like, um, I did history as a kid long time ago and if you look at, and I'm sure we'll all have different views of the bytes and I happy for that to really encourage, but if you look at what came out of the Second World War, uh, the Marshall Plan and then, uh, the outcome dissolved that and longterm globalization, long to interaction between Piper will need people in the interconnectedness civil. All of us, uh, has driven or higher standards of living, lower death rates, lower mortality rights, how at birth rights, uh, survival rights, things like urea, polio, measles, mumps, [inaudible], nearly eradicated, uh, around the world. We have higher standards of living. Look at Singapore, look at Asia to look at, have things have challenged and we're thinking of getting away from globalization. But it's been nearly the greatest thing that has happened to human calling to draw.
Speaker 2:
40:06
I've wealth survivability standards, living a quality. And we have this discussion about isolationism and we have this discussion about trade wars and we have this discussion about the ing isolated, what an understand. Um, but it's definitely having an impact or I saw some horrible numbers in airline parts of some of our business way last quarter. We were down 17% on the comparable quarter last year full up, uh, tried the time one continent another or the big numbers. First of all, we're already having discussions with some of our customers on moving from one country to other countries. The problem with that, it'll be electricity, water core architecture, infrastructure around roads, ports, et cetera. Or these that isn't going to happen quickly. We're going to see now that some manufacturing moved back to some western countries. Probably means the prices go up because of Labor at one install be offset by the reduction in transportation costs.
Speaker 2:
41:20
But I think that makes the world much more unfair and unstable. It's a lot more worry about tried war. My worry are, are uh, a roll back from globalization, a lack of interconnectedness that lead to something other than atrade war. If everyone has skin in the game in every country or in most countries, you don't hurt a country because you have skin in the gun. If you bring everything back to your own country, you have no skin in every other countries, so you don't care as much. I think that's a much more, uh, up from sun to the tribal become something else. Or look at what isolationism, look at what nationalism, all the Isms have done over the last 200 years. They weren't good outcomes.
Speaker 1:
42:15
Yup. Yeah. And there's, there's, there's definitely extreme pathways, so hopefully we will not get there. For now it seems that we have, we are having, without going into the detail, some un Natalie's or, or accidents or exceptions, hopefully it's exceptions, but, um, hopefully it will be, it will be mitigated sometimes. Also we as human beings, maybe we need to, you know, you need, you need to try a new thing and then you realize, well, maybe it wasn't the right thing. So,
Speaker 2:
42:43
okay, look at [inaudible]. Look at Al Industry. It's built around global. As I look at hell though, the many wonderful jobs in supply chain logistics had been built through globalization. Look at that talent that's seen our global supply chain engineers, mathematicians, analysts, uh, lawyers in lawyers, accountants, actuaries, auditor's like this is an industry that is not now about blue policying, what's Nestor? A lot of those as well, blue collar jobs, but they tend to be really low paying jobs and very consistent. But this industry has amazing people that are amazing intellect, but any, a lot of it's formed and it's, ah, exponential growth has been around globalization. So I worry for our industry also. We've become very isolationist now thinking that that does that mean that the gene pool or contract
Speaker 1:
43:47
[inaudible] yeah, I want in the future we'll tell that and I liked that we kind of brought the topic to the pit to the people side, which was my next question and I want to start with culture. Culture is that some people it's a fluffy thing to do to others. It's not so fluffy, but ultimately it's an intangible. Um, it exists but doesn't exist. Um, but it's, it's, I mean you can feed it, let's say you can put the finger on it, but it's basically made up of the values of the core behaviors that you want people to institute to display in a company for tall and for making sure that all it is, is a good company for the future. What, what would you say that tows culture is defined by and you as the CEO, what are some of the values that you want drive in
Speaker 2:
44:32
that culture? So we're going to have to go back and Unpeel your big question. Culture is unbelievably important. You can touch it, feel it, smell it, it can hit you in the face the moment you walk in a way. I have a simple test - Whenever I go to a big warehouse or trucking operation or big hardcore operational activities. There are only two places you walk into - You're going to the toilet and you're going in the canteen and it, and if the toilets are disgusting and if the Canteens are disgusting, you know your leaders don't care about their people. Because they are two really intimate, personal parts of your life where you go to the toilet or shower and where you eat. And I think we miss simple things and say culture has to be about this or write it all on the board and most of it means nothing.
Speaker 2:
45:40
And most of it doesn't translate into the hundreds of languages and different dialects anyway. But how often do you go to a hardcore operational site and it looks like adapt more? If it does, you got to care about the people. And even an old facility can be amazingly pristine and clean. It's just about care and attention and affection for the people. Do we get that brought every day? Absolutely not. Pop culture is living and breathing. I know that however long I'll be here I can spend years on culture and behavior and then in 38 seconds, my one bad decision and I'm one hundred years of more work or can I stuff it up in a blink of an eyelid and MDs and CEOs and JLT members of your team members around the world don't realize or think how quickly that can destroy years of work around behaviors and culture.
Speaker 2:
46:38
People want more than a job, particularly went on unemployment story or if you're in Japan, it's 2.2% if you're in North America, what is it? 3.3% if you're in Australia, it's 4.8% or 5.2% people get a job, but job getting a job typically isn't the problem. And then if you're in logistics and supply chain, usually it's seven or eight or 9% of the economy and it's growing. So getting a job in supply chain isn't that hard and people want to be treated with respect. I want to be treated with dignity that I want to thing guys. I spend probably a disproportionate amount, which would probably sounds bad, but just thinking about how that caveat, talking to people, engaging with paperwork, people have really strong views on what the culture and behaviors should be like. And we're not all gonna agree. A lot of that has come up through your own.
Speaker 2:
47:30
The Chun not nature. Culture comes up through how you were brought up. Your mother, your father, your brothers, your sisters, your cousins in which school you went to, which languages spoke, what your background is if you in a religion or not. And all those bits of the fabric Taco has a really interesting and difficult culture, uh, which we are working really hard on. I think it's another probably thing I wouldn't get a tick on, but it wasn't in the sixth dimensions. It was in highchair. Um, we, we have probably, we have a business that came up in 114 whatever the number is. Acquisitions. We have a lot of really strong cultures and different countries. Uh, in some countries we had what they called a, a local hero strategy where we bought the best business in that country, in that sector. Well that was the best business in that country, in that sector. Cause they had a really strong culture that doesn't mind that culture didn't fit with the other 42 or 49 countries. Well, what we're trying to do is a deeply engage with our people and it's about safety. Everyone must be safe. People need to be treated with dignity, stolen compassion. People will say, well, you're caught. You've closed nine countries and seq 3000 people. You can still do that with dignity, style and compassion.
Speaker 2:
48:56
We need to offer people that are Korean, not a job, uh, paperwork, curries or that young people don't want to stay forever. This is a real work in progress. We had, uh, we had 153 most senior leaders in the world together two weeks ago, uh, in Australia the year before we had them in Vietnam for the first time. We took 153 senior people in the world, uh, at sort of aspire and talking about culture and behavior. We are just about to relaunch, uh, after interviewing four and a half thousand employees at random, uh, what base it our culture should be. And then we interviewed a lot of our customers who's said it as well what they wanted and we'll come down to the five key themes and see how that goes. We want to have one culture for Toll. Um, this is a really tough bit of work here. Um, probably the hardest thing to do and going, I was, uh, the leader, one of the latest here that if I do something wrong or can blow it all up in 38 seconds,
Speaker 1:
50:04
mmm. And putting the finger on it, especially when you've had so many different organizations that came together through acquisitions, it's so difficult because they have each subculture and anyone, this process of refinement and kind of getting everybody to be aligned on the same, on the same fundamentals is super hard. And then getting them to act on it. Cause. Yeah. One thing is alignment fun. The hardest part is do you act on it everyday and displayed to the staff and the troops and then for them to to reinforce it
Speaker 2:
50:35
and then does it, which I think was where a lot of this file and no doubt over more than 30 years at work I've filed a lot of times the culture, so the GLT and the board or think they've done a really good job there. I had the right culture and then yes, such permeated to the Teal t, you know, leadership. They're mixed 153.1 and that might permeate to that James, the next 300 people around the world economic fantastic job. So the board, the drill to the TLT and the GMS, they're all on board. There were 500 people out of 40 45,000 who really cares? Does it permeate into the business and and become in grind to the point where it doesn't matter if the JLT or the [inaudible],
Speaker 1:
51:26
it's about the DNA. It's about the day and I, and what do you see it? So I'm building it on the culture and building the circle because the culture is ultimately is not about them, but it's driven by CEO's, by, by the board. And also this is forever changing. Right. So the industries are changing, our world is changing. And also the C-level of people like yourself in your position need to constantly change. What in your view are some of the key success mindsets, behaviors that the CEO should have to maintain relevance of himself or herself as well as the company for the future, for the next five to 10 years in this kind of constantly changing world? Well,
Speaker 2:
52:02
so there's been no way, easy questions that I had said. I'm not here. My last one Mike, you can have more, but this is the, I think, um, so they just started my ITT I think as this. So yeah, I would do. And um, I think as you get older you do exactly the opposite to what you should do. Uh, you don't take enough risks with people about policy that, um, you get trying and we all do way. I wouldn't be eyes. And while I did my masters a silence and you go to all these top schools and they train you a certain why he kept trying to sit upon and the w the longer you in jobs, the more you get trying, the more you get looked after and the more you get in chiller or isolated from the real world nearly because you get looked after so well.
Speaker 2:
52:56
And that just makes you not take enough risks with people. I think that um, uh, the seven and a half pick a number, seven and a half billion people in the world. I'm sure there's lots of fantastically smart 20 year olds out there who are wonderful, but why the top end of businesses or 40 and 50 year old people, 60 year old people, very confrontational. I said this the other week, why isn't they out allow 153 we only have six people in their, uh, we signed that. I had a seven and a half billion people. There was only six people that could be in their twenties. And if the world is changing so much, why don't we have a recruit really different people? Cause if we're saying the future's going to be so different than the past, the war is the past such a a pre determinant for selection of person to run the business for the future. You're t logical cause I think in regard to what what MDs and CEOs they deal is somewhat unblocked their training because the world is not as predictable as it was. Uh, I think that we need to employee engage people through different avenues to recruitment.
Speaker 2:
54:10
People want different things. Um, I think we need more younger people in our business. Every judge in Toll and driver in Skype is 54 years old. Well that said, try and recover. Coming isn't trying. Right? So how are we going to get a lot more young people in the business? A lot of people think our industries about blue collar work, but we have everything from phd mathematicians to doctors, pilots, helicopter pilots, ships kept things, uh, experts in engineering, explosives. But we have this set mindset on it is going to be in these roles. All, I think control when they do employ really different people in the way of businesses for the future. I think it's a really interesting time, but that is a challenge. We tend to look to recruit people in our own likeness. I think that's somewhat over. I've applied, I think the Mailey would move past a lot of that, but we still employ paypal from somewhat from the sign, each prideful and we, we, we want to see a continuum all in their resume. Instant sign-on. This person is a superstar. They're only 20. I had got jumped four levels and really drive more challenge. Um, I don't think we have to do that as in bs and cs, but that's a really big challenge. And that as one day out of 20 of the top senior mds of logistics companies. So now finally, all I do at the other 90, you'd have to do it as well. Well,
Speaker 1:
55:47
sometimes I, I would argue with sometimes it's, it does put you in a competitive advantage if you, if you're the only one doing it, because then you attract the interesting talent and say, oh, this, these guys are different. Right? Or this company is different. But I'll just build upon your, your points. I'm one personally, I could not agree more with the fact that logistics supply chain in general needs to do a much better job at storytelling that's sharing with the world. Look what, what do we do is not just, you know, moving boxes here and there. Actually we enabled trade. We get you the bananas from this part of the world doing to your table. We, you know, like, like you said, told us a lot of defense. So there's basically, when you hunters, you healthcare solutions, there's not enough storytelling for people to understand them.
Speaker 1:
56:29
The importance of this sector. Yeah. So I think that's one thing that, that we should do more in the industry should do more. And I, we did much, uh, very much like you're pointing obviously in one of our main businesses into head hunting and executive search. And I'm also seeing the trends of executives being more and more open minded about leak. And I'll do business the same way. Hence we cannot employ the same people from our competitors all the time. Right? I mean, I'm not saying that you go totally revolutionary and change and put all different non-industry focused. That's, that's not what I'm saying. But we've had the case of a CIO for a supply chain organization, then they hired somebody from a gaming industry as a CIO because the mindset was different. So as long as you reinforce that, I think that perspective can be quite a lot different for the business and help the business in their own and be more competitive.
Speaker 2:
57:17
So I think, I think you're 100% wild that the industry, the sector has, doesn't have a really, really bad job. So some of it's my fault as well or really bad job on the narrative of who we are and what we do. Um, and narratives that's coming yet soon. It is. We do things that make a difference. If you are flying a helicopter 200 miles at the seat of rescue someone and you're going to jump into the water, there's nothing more you can do to make a difference. You're saving someone's life. If you are, if you are running for a couple of countries, a pandemic response, that's gonna make a real difference. If you, if you think the only thing we're delivering is kilo, it's called flux like a case. But every few are doing something that is, there's a solid client and then you'll helping live a government to bring aid and siding peoples off.
Speaker 2:
58:16
That is what rural supply channel logistics companies doing. Lots of the, it's not just us, all of the top 10 would do it, but we don't share that narrative and I think we've done a really bad job there and we need to show such a better job. I think the second part to your question, little commentary there is that, um, you, you need to recruit paypal. I think firstly the way we need to move to, and this is why we're doing the same much where years worth of work's gone into it. Once you get to a certain level and you've gone to a certain school or university, your smart, you might be, you not have any common sense, but you are smart. If I tried to set a y you, you can add up, you can write. Most people get to a certain level like dress.
Speaker 2:
59:03
Will they speak well? They are articulate. They numerous, they worldly. A lot of people in logistics have very worldly because of globalization. But do I have the right values and behaviors to run organizations with tens of thousands of people in them? Uh, you only gonna of that. I want to make money. We'll all can do that too. You can change the balance sheet. You can change depreciation rates, you can do financial engineering. There's lots of people who can do that. But we need to pick people in our industry going forward. Who as much as being smart and will educated, uh, have a real sense particularly in where there are countries that don't have the frameworks of some of the wisdom countries yet as they develop them grow up and, and they're amazing the frameworks of values and behaviors that they treat people and customers, the environment and their social responsibility really seriously. So I'm looking forward to how we recruit very differently going through.
Speaker 1:
60:10
MMM. About the fundamentals. Again. Michael, thank you very much for the sharing. It's been a very insightful podcast. Good luck with all the good work at tall and um, and hopefully we meet again with Michelle again in the near future.
Speaker 2:
60:21
Hopefully. Again, thank you very much for your time. I have, it was interesting. Thank you. Thank you for listening to all
Speaker 1:
60:27
podcasts. If you like what you heard, be sure to go to www.ellicottglobal.com and click the podcast button for all the show notes at the interview. Also subscribe to our mailing list to get our latest updates. First, if you're listening through a streaming platform like iTunes, Spotify, or Stitcher, we would appreciate a kind review. Five Star works best to keep us going and our production team happy. And of course, share it with your friends. I'm most active on Linkedin, so do feel free to follow me. And if you have any suggestions on what what to do and who to invite next, don't hesitate to drop me a note. And if you're looking to hire a top executives in supply chain or transform your business, of course, contact us as well to find out how we can help.
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