Leaders in Supply Chain and Logistics

#77: Christopher Logan Managing Director at Accenture

April 21, 2020 Alcott Global Season 1 Episode 77
Leaders in Supply Chain and Logistics
#77: Christopher Logan Managing Director at Accenture
Show Notes Transcript

Christopher Logan is currently a Managing Director at Accenture and Leads the Freight and Logistics Practice across Growth Markets: Asia Pacific, Middle East, Africa, and Latin America.

Discover more details here.

Some of the highlights of the episode:

  • How China’s supply chain system got back up in early March
  • 3 advices for CEOs of logistics companies after COVID-19 
  • Rise of e-commerce and last-mile in times of crisis
  • How to balance bottom line and care for employees
  • “Characters are not built during a crisis, but characters are revealed in times of crisis.”

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spk_1:   0:00
Hello and welcome to the leaders and supply chain protest. I am your host Rod a problem? Are you managing director of Ellicott Global? Our mission is to connect the supply chain ecosystem by bringing forward the most interesting leaders in the industry. And it is my pleasure to have with us today. Christopher Logan. He started managing director of the century and leads the freight and logistics practice across growth markets. There's a Pacific, Middle East and Africa as well as let in America is collaborating with clients and with fellow eccentric consultants to drive innovation and digitalization in freight and logistics businesses is the industry undergoes a once in a generation transformation. Across his 25 years plaster year, he has worked on global logistics and transport businesses, strategy consulting, global trade, emerging market as well as exploration and mining companies is an active participant in the World Economic Forum activities and was also selected as a world economic form young global leader in 2008. Christopher thanks a lot for making the time in a real pleasure to have you with us today.

spk_0:   1:04
Radio. It's pleasure to be here and thanks for having

spk_1:   1:07
me on I want to start with the whole topic of Ah, well, everybody's life's pretty much of the current in the current situation, which is covered 19 and the current crisis that we are experiencing. And obviously it's impact on supply chains. So maybe let's start with what's your view on where we are today, how we got here and also what's next.

spk_0:   1:30
Excellent. Excellent. Uh, today is a really interesting time to be in the logistics industry because the industry was probably one of the first to be impacted by Cove. It 19 as many of your listeners would know, the impact started all the way back in January, as as Hubei Province in China entered a full lock down. And as the world's largest production economy and the largest logistics network, it basically ground to a halt during Chinese New Year and for several weeks thereafter. Then the logistics companies in China and those international firms working in China had to work heroically to restart an entire country's logistics supply chain system, and ultimately they got the system back up to 70 to 90% capacity in early March, which was Ah, phenomenal ah achievement, and for a time, people thought, Well, that might be the worst event from a logistics point of view. However, in mid to late March, Cove in 19 went global and logistics challenges also hit global. So we've had capacity constraints everywhere around the world. Ah, although not as acute as they were in China but they were in pretty much every in major industrialized country in the world. And the logistics companies then had to pivot and continue to work heroically but all over the world to keep freight moving. Despite these challenges, um, and also at, as you know, right about that time with the working from home became the norm for for almost everybody except for those people who are physically handling the freight. And that's still where we are today. Um, the there is 1/3 wave that is just beginning and is going to last for quite a long time, unfortunately, and this is around the demand shocks that are going through the global economy right now, uh, you've got the lockdowns which are limiting consumer demand and industrial demand all over the world. And that is likely to, uh, to continue to be lower than normal even after the lockdowns get lifted, although we don't know exactly when that's going to be or how long those lower economic activity is going to last. That lower freight revenue, a freight volume and freight revenue is going to put even more pressure on logistics companies over the next 6 12 18 months. So there's a lot of negative going on in the logistics business that that we're having to deal with. But despite all the cast, there have been a few positive bits of news for logistical. Ryder's home delivery and last mile logistics are seeing huge growth, and we can talk a little bit more about that. And there are a few customer segments have seen large growth, like grocery and, um, emergency air freight for medical supplies. So there's a lot of transition, and in that context, I think, you know, cos have got a lot of challenges of what? What do you do now to to deal with these things? And then what do you do next to make sure you're prepared for what's going to happen in the future

spk_1:   4:48
and wanted to actually dig a little deeper? Because indeed it's it's it's literally unprecedented what we are experiencing. We've never seen such a crisis in our lifetime with the shock in supply and now in demand in such a short period of time, right? So it's Ah, we've seen other crisis, but it hasn't been as abrupt to leading to half the world population being in lock down, and the consequences of, you know, demand that drop that generated from that. How is the logistics company? Or what would be the priorities that you would advise your clients from logistics from freight forwarding and so on to focus on during this time, where most likely they will suffer cash flow issues, they will suffer flying demand issues. What should they look at and focus on to make sure that the business maintains a certain level of continuity and is emerges out of this in a good shape? Really? I don't know if good shape is the right word, but emerges out of this crisis. Well, it that's

spk_0:   5:51
a great question, and I think you're exactly right. They need to focus on what do you do now to keep the business viable, and then what do you do next to respond to the bigger changes and position yourself for the future. So in terms of what to do now, most of the logistics companies, certainly the larger ones are are already on top of this. And there's really four big elements. The the 1st 1 is to create a response center and have your business continuity plans and to be able to execute those in in a coordinated way, either centrally or decentralized, but under very specific guidance from a single plan. That's point number one point number two is All these companies didn't implement widespread measures to ensure the safety of your front line workers. So even as some logistics companies are not a directly touching the freight, many of them are, and many of them are still in the general public, there are deemed essential. Service is pretty much everywhere around the world, and so the safety of your front line workers has to be your top priority. The third area that's important for the people who are not on the front line, but the people who have got the capability to work from home is you need to provide a ah set of capabilities and norms to allow them to be productive working from home because this is, uh, absolutely central to keeping your business moving. And then the last thing which is is probably the the end result of those three plus a little bit more is you need to ensure that the freight keeps moving. There are huge challenges with every capacity in ocean freight capacity in different ways. We can talk more about that in a few minutes. But number one, you need to keep the freight moving. Because what you do as a logistics company and what you do as Theo employee of logistics company really matters because you're the ones who are getting goods on the shelves. Ah, for the rest of the world, and and you are an essential service and you need to keep working heroically to to keep all of the rest of us able to, ah, to continue our lives.

spk_1:   8:12
Mmm. And wanted to also linking it back to the areas where it grew. And then you mentioned the Commerce Commission deliveries. You mentioned this type of pockets specifically linked. Obviously people being at home in ordering, ordering stuff, online groceries and essentials. Um, I was reading even today a very good initiative in Singapore. Ah, itself where the taxi company, confident girl is the taxi company here in Singapore will be doing grocery deliveries together with the E commerce Online Ah, Commerce supermarket, Um, this that this type of activities are happening in other parts of the world USA and and so on. How do you see this? May be, it may be. Let's also focus on the positive and how some of this company's have paid up have have done last month together some of the creative ideas that have come out of that from from your clients as well. Maybe you can share some case studies. That's an

spk_0:   9:04
excellent case study. And, as you said, that's also going on in many other parts of the world. So the trend is interesting because e commerce and grocery delivery in particular are growing enormously right now because a large percentage of people are are working from home, and I've got some restrictions on their mobility even beyond that, Uh, so those air trends that we had seen over the last 5 to 10 years, But they've dramatically accelerated now, and our expectation is that they will stay, maybe not at the levels they are today. but much higher levels than there were two months ago, when even when the lock down gets taken off, so the trend is clear and has accelerated, Um, the response across the board has been to full. One is tthe e existing e commerce players, mainly the large players in who are headquartered in China. But who's got operations? Throat Asia and e commerce players in the U. S. Who operate also in other regions, have been doing a great job scaling up their own resources to to deal with the surgeon last mile delivery. Other players have had to get more creative, and it the example you used around Taxi Company doing home delivery of groceries is a great one. We're seeing that and a lot of other places. So the recommendation that we have for our clients, almost regardless of where they sit in the logistics value chain is you need to rethink your last mile, and you need to get more creative about that, and it's part of it is responding to the demands and the opportunities that exist today. But many of these opportunities will also exist six months from now, 12 months from now, two years from now. And that doesn't mean you need to build up your own home delivery network. And there are some great opportunities to partner with some either traditional last mile delivery carriers, some nontraditional, like the example used with taxi companies or some emerging startups who have then ah, focused on last mile delivery for the last number of years but have not necessarily found the huge growth quite yet. So the flexibility around your network models on last mile delivery is is gonna be a really key success factor for ah. For most logistics companies going forward, even ones who have not traditionally been involved in B to C home delivery, you'll find that many more of them are are getting involved right now.

spk_1:   11:47
I need to any to ask you on this one, because my impression, um, is that most, most traditional three pills for lack of a better world, um, are are lagging behind when it comes to our undoing. Nothing, actually, in a lot of cases when it comes to eat commerce when it comes to last night, even when it comes to ah, on the delivery side, how do you and there's also the reality that no, almost nobody has cracked the $1,000,000 question. How do you make money out of it? But there's there's very little margin in it by itself. Also, how do you see this moving forward and any mention that some of them are going more aggressively into it? I'd love to go a little bit more deeper and maybe with some examples of what you've seen done by Threepio Zin in generally in going and maybe also accelerating this process of becoming more flexible and adapting their models to e commerce.

spk_0:   12:50
That's great question. We tend to see three different models that companies have followed and some people who have been sitting on the sidelines, and I think the time for sitting on the sidelines is over. Eso won model is for companies, whether their e commerce companies or logistics companies to invest in their own delivery networks and obviously for the Large Express Cos they already have delivery networks for other companies, they've got the opportunity to build them. Some e commerce players have decided to build their own. Um, some logistics providers also have the potential to build their own, and that is a path that you need to decide on and then and then commit to. Ah, the second area is potentially to, uh, is the partner and to work with existing last mile delivery specialist. You'll see a number of those in whether it's in Asia or Europe or in the U. S. Um, companies that are focused on on Leon last mile delivery and providing the service is so traditionally a lot of logistics companies have seeing them as either competitors or something that they didn't wanna want to deal with. We're seeing increasing talk of partnerships, and I I would believe that that's going to continue beyond the current opportunity. And those will be more long lasting partnerships going forward. Ah, or the last one is is similar where you're working on a more technology based tapping into the gig economy and creating a last mile delivery network, um, with more independent contractors and whether you do that yourself or you partner with somebody who's got the technology to do that. Ah, but that's another approach where you could sit it out completely, Um, which is probably less desirable option because e commerce has traditionally been the fastest part of earthy the fastest growing part of the logistics business. And that's only going to accelerate,

spk_1:   15:01
huh? Would you see also this crisis impacting the digitalization of the logistics industry? I mean, we have been a lot of talk digital afraid forward is, you know, export freight hub Zen cargo freight. Uh huh. Prate tosses. Well, there's a few of them, right? So, um, versus the more let's say the more established three peals. How how do you How do you see this? This suspect?

spk_0:   15:29
I fully agree This is definitely going to accelerate the digitization or digitalization of theory, logistics industry, and that will happen on multiple levels. So one, as you mentioned these startups that have really come into being really only the last five years, Uh, that will accelerate there. Business models. However, the incumbents have many of them. Ah, many large ones have already started the process of digitalize ing their own business models, and that needs to accelerate. And those that accelerate this process will likely end up being the winners several years out. Uh, whereas those who decide that this is the time to trim costs and cut back on their transformation efforts will lag behind and we'll find themselves in a worse competitive position in the next number of years. Um, a think in terms of digitalization in the future. We're gonna look back and we'll see this as an inflection point. And not that Cove in 19 caused any of this. But it could be seen as the before and after in terms of the full emotional commitment to becoming a data driven company. And and I think there's, Ah, there's a fundamental difference in mind set between, say, the e commerce companies or the digital freight companies that you mentioned who view themselves as as data companies supported by by people versus many of the more traditional companies see themselves as people cos supported by data and technology. And I think that that paradigm, um, needs to shift. And and perhaps this is the event that that shifts that mindset for a lot of people.

spk_1:   17:26
Ah, I'm gonna share this, cause that you might have You might have seen it as well. It was circulating on social media. Them, um, it was a tick books question and four different answers, and the question was what helped the most in the digital transformation of your company. Answer a the CEO extension Answer be the CTO and sissy. Uh, jail teams and Cindy covet 19. Crisis on with a big tick on the covered 19 crisis and, uh, is without a doubt. Ah, there's a number. I mean, one of the biggest challenges that people face right now that you're gonna wears my stuff. Installation. Where's my Where's my goods? How do I plan? How you know? How do I even make sense of my supply chain? How much should I order? How much demand do I have? Do I have any demand? Do I have any supply? All of this is And how do you do? I manage my work force. On the other hand, right. Which is, by the way, all all of them, uh, the office side, at least working at home and and the front liners are working in the force. And how do I ensure the safety is all these things? A CZ? You rightfully said I would completely agree as well. This inflection, it's just gonna accelerate the whole, um, push for digital. And I think you cannot do it without it. Anyways, on by on this point, I wanted to ask specifically for technologies and new practices from a tech perspective that you've seen maybe deployed around this times to, um, either give businesses visibility in their supply chain better if you can even predictable they don't think you can predict a lot. But, um, you know, in terms of ah, what to do in this situation have have you seen any that that struck you? Have there any good examples of tech being used in supply gin in this crisis that you can mention? Well, I think

spk_0:   19:21
overall, the technology that the e commerce companies have put in place over the last number of years eyes really showing its value right now. And I think that that they're the big winners out of this and a big part was because they've got the technology to, ah, to accept orders seamlessly from customers and to link that to a logistic system that they control. Or that they're tightly linked to to get cost efficient delivery to end consumers with a high level of visibility so their their technology is was really made for this type of a situation. And although they've been gaining market share for years and years, and years. This is perhaps their breakthrough moment. Uh, and ah, a number of the more traditional companies are starting to look too those technologies and and trying to understand in more depth. Well, what is it that the D E commerce players air doing? Ah, And what is that? The that weaken d'oh! To emulate some of that, even if we're not gonna become an e commerce player. But how do we become a technology? First Data first company. And Ah, And it really links to your previous point about the tick boxes and and, you know, Cove in 19 being a big driver of change. Ah, the way we see it is that ah, you change. Management is hard. Ah, change management is exceptionally hard when you're dealing with logistics companies who have been around for literally hundreds of years in in many cases and what times of crisis do is it? It unlocks at least half of the change management, which is getting people to understand that there is a need strong need to change. Ah, And when the crisis unlocks that it actually opens up possibilities for firms to do things Ah, that they knew that they needed to do. But we're just too hard to do internally, and we're seeing a lot of that. We're seeing a lot of reading, a lot of conversations with clients around. What do you do next? And And what does that look like? Given that we've got the, you know, the mandate for change and the openness to change from the staff that might not have existed even a couple of months ago?

spk_1:   21:55
Ah, this is this is a great point. Um, and also as a as a leader is the CEO of a company. I guess now it's a time where you need to be resilient on one side. You need to be focused on the on the fundamentals on cash flow and all of that. But at the same time, you need to balance the employees. How they're feeling was this little Most people would feel insecure in this Times and also the, um, this this type of balance is very is very, uh, sensitive. I guess the question is, would you have any advice? You know, for the executives of the company is more on the sixth, so skills and and communication, and I guess ah that side of How do you maintain the ship and how do you inspire and lead the people in this times?

spk_0:   22:41
That's a really important point. And I think this also shows the leaders. Ah, there's Ah, there's the same that you know, characters not built in crisis. But character is revealed in times of crisis, and leadership is is absolutely critical. Right now, we believe that a lot of responsible leadership, it involves two parts. It's it's the head and the heart. And it's understanding what needs to be done and being rational about the current situation and what what plans need to be put in place and how they need to be executed. End marrying that with the human side of the equation and being able to show empathy, compassion and and caring. And ultimately it comes together in in one word, I would say, and that's and that's trust and that senior leadership, uh, the CEO, but also the broader leadership team needs to focus on engendering trust from there there, ah, company. And the way to do that is to lead both with the the rational side and explain to people what's going on and what the company is is going to do in this environment. Ah, but then also lead with with compassion and caring and understanding the human element and and and understanding how disruptive this is and stressful. This is on each and every person in in their in their sphere because it's it's ah, it's a double disruption. It's the disruption, actually, Sorry. It's a triple disruption. It's ah, it's the disruption of their day to day working practices, which the employer would probably have a good understanding of. But it's also disruption in terms of their dated a living, working from home with their their their spouses, their Children, Um, and that creates a whole new dynamic and new stressors that we need to be mindful of is and empathetic about. And then there's the health crisis itself. I mean, as the numbers keep going up, more and more of us know people who are directly impacted, um or are safe. Frontline health care workers who are involved in the middle of this and and all of those things build up stress and and good leaders understand that and deal with that head on and have discussions around that Ah, and then and then the last piece is is uh, you know, you continue to follow the good practices off communication, making sure that it's it's frequent, making sure that it's empathetic, making sure that, Ah, that people know where to go Well, when there are issues and that you support them when they're there are issues and and we'll, you know, we'll know in hindsight, the leaders and the companies that are are able to execute on on all of those things. It's it's a challenge. But, uh, we've seen many companies step up to that challenge, and that's Ah, that's good to see

spk_1:   25:52
And I know that you have ah, are in doing a bit of a bit of research and preparing for the interview we stumbled across one suggestion that you have in terms of simple and clear communication. I think it was you were saying about the rule of 10 times 10 times 10 and maybe you can share a little bit about that. Yeah, I think that's that's

spk_0:   26:14
a great example of best practices in communication that you, ah, you need to repeat messages in in many different ways from many different sources. Whether they're written verbal, um, video s so that people will understand and not just understand, but we'll retain it and internalize Ah, what? What you're trying to get across a lot of the details will get lost. And that's okay, because people, if you've got ah ah, robust structure people can convey go back and get the details. But I think the key thing is is around building that trust and making sure that that that resonates. And that does take, um, the the repetition from many different sources in many different ways.

spk_1:   27:06
Mmm. I must share when the person that I'm quite an impatient pressing myself in a lot of times, like I find, ah, or I would love the team or our team to pick up things faster. And you're this this rule of saying 10 saying something 10 times in 10 different ways for people to retain 10%. It really got to me because that's that's when I realized, like, yeah, you know, uh, that's that's probably a much more realistic approach toe toe are much more realistic. ALS expectations, too, had to have gone on the team and also making sure that ah, ourselves as leaders, you know, put in the year that that the effort to do it right So I I must personally thank you for that. They kind of struck somewhere. Ah, accord with me for sure that's hung. So if you want to put yourself in the position and this is kind of a summary, if you may have all our conversation now So if you were right now, Christopher running Ah, if you're the CEO of ah Global logistics company and with all that we have discussed. But if you're to stand and all the clients that you're talking to But if you were to distill it to maximum three things that you would focus on in terms of making sure that in 12 months the company you know would be in a good position Tau after this crisis was hopefully include months, expresses will be gone. One. With those three things

spk_0:   28:35
be. That's a great question. And and that's exactly what we spend most of our time doing, speaking with global CEOs and understanding what it is they they need to be doing now. Ah, and and more importantly, as your asking, what do you do next? And by next? I mean, you start today to be ready for the very short term future. So the three things would be number one. Accelerate your current plants. Most of these companies already had plans and initiatives in place to modernize their companies in different ways. Ah, those air probably almost all still valid. But you need to accelerate the most important ones. And I'll give you two quick examples of those, um, one is around automation of physical processes and facilities. Uh, that is something that's been ongoing, particularly in the higher labor cost environments for for quite some time. And that needs to not only continue, but it needs to accelerate, as as people understand that physical when you've got physical processes mixed with labor, and then you've got social distancing requirements that doesn't mix. And so, ah, you don't have to go to a fully automated hub or fully automated warehouse, but increasing the amount of automation that you do have combined with your little. Your labor force will allow you the flexibility to continue to operate in scenarios like this, and and so that resilience needs to be put into your business cases around automation, and you'll find that that in many cases that will push push you over the edge to to say, all right, well, even Maur a greater share of our facilities worldwide Our, um, amenable to automation or partial automation because of that new consideration. So there's a big acceleration in that. The second area of acceleration is theme modernization of I T systems. Many logistics providers air still operating on very old I t systems that they're modernizing either, and, you know, you know, in a big bang new system or in smaller, incremental improvements that needs to continue. But that needs to accelerate. I think that that companies who are operating on the old systems have found that they're not quit so flexible and her really inhibiting their ability to fully work in a virtual environment. And, uh, the companies that accelerate their their I t modernization will will come out. Winners in this those that decide they're going to slow down or cut back on new investments. I think you are going to struggle 18 24 months from now when they see what the competitors have done. So the number one is really accelerate your current your current plans, um, number two, and we touched on this a little bit earlier. But it's it's around implementing new digital ideas and frameworks, so focusing around the data first and around, what data do we have? How do we decouple that from our our operations? How do we link with the data that is upstream and downstream from us, and and how do we actually generate value from that data and improve our our operations That includes, you know, machine learning and dashboards? And there's lots of other things that you can do with that once you you take it data focused view on the company. Ah, and that's a that's a fundamentally different view on the company then than most have. Ah, the third area, he said. I have three. The third area of what people need to do next is ah, you rethink your networks, and this is absolutely critical. We already talked about the rebuilding the last mile through ah, collaboration or other things. So I think rethinking your last mile is super important. Um, the other area would be to adapt your network, and service is not just to what the needs are today of your customers, but what are they gonna look like tomorrow and the day after tomorrow, the day after? I mean, when the economy's coming of locked down, how are your customers going to be gearing up their operations? And you're going to get some some wild swings in demand. And you know, the bull whip effect all the way through the supply chain. And you need to be ready for that from a from a network perspective and and so, working with your clients to understand what their plans are for restart is absolutely critical. And then tomorrow, in the in the medium term, a lot of your clients are going to be restructuring their supply chains. They will be looking at where they've got, um, you know, single source points of risk that will be looking at building and flexibility into their supply chain, not just efficiency. And that means logistic providers. We're going to have to adapt to to those new demands. And so now's the time to be anticipating those demands and to start orienting your networks, um, around that

spk_1:   33:47
and then and then the 3rd 1 I

spk_0:   33:48
just left In terms of the Network New Network idea, the one bright spot that we're seeing is is actually China. So I would say Look to China. From an economy point of view, it's it's getting back on track. From a production point of view, it's getting back on track. Ah, they're currently suffering from lack of demand, as as most retail in the rest of the world is shut down. But if you if you just look at how they've responded to the health crisis and how they've responded to the economy, it it's looking like they're going to be getting back to normal faster than anyone else. And they could potentially lead us, um, head of the economic recovery as well. So if you're a logistics company that has exposure to China, um, I would say double down on China because that's going to be your your area of growth for the for the next little while.

spk_1:   34:43
Super no excellent. Excellent points on that note. Christopher, I want to thank you for your time, very insightful and relevant sharing. And, you know, hopefully this crisis will be gone sooner rather than later. And for sure, lots of learnings and lots of lots of case studies and lots of discussions in MBA classes will be done on this carpet. 19 it. Trust me. Um And, um yeah. Thanks again for your time, ma'am, For joining us today. Thank you so much for having me and and, uh, just to reiterate. I think it's what logistics companies do now is going to be critical for how they come out of this in the next 2 to 5 years. So what happens in the next six months is pivotal to the whole industry for sure, for sure. Thank you, Christopher. Thank you. Thank you for listening. If you like what you heard, we should to go to www dot l called global dot com and treat the podcast button for all the show. Notes of the interview also subscribed our mailing list to get our latest updates. First, if you're listening through a streaming platform like iTunes Spotify arts teacher, we would appreciate a kind view. Five star works best to keep us going and our production team happy. And, of course, share it with your friends. I most active Arlington. So do feel free to follow me. And if you have any suggestions on what what to do and hooting by next don't hesitate to drop me an out. And if you're looking to hire top executives and supply chain or transform your business, of course, contact us as well to find out how we can help.