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I interviewed Patrick Mataix who discussed Disruption in the International Executive Search Industry.







Can you first provide a brief background of yourself?


To speak a little bit about my background, I have an engineering degree in computer science, and I did about 10 years in a large corporation in service and marketing in Europe mainly. Then I graduated with an MBA from INSEAD back in 1996. When I graduated from INSEAD, I co-founded a company called Vistaprint with an alumnus from INSEAD. The two of us, along with two big dogs in Paris started the company. We moved to the UK, bought a company there, bought a company in Germany and moved to the US. This company focused on e-printing. So doing printing, commercial printing but from your desktop and internet. This company has been very successful because today, it's floated on the Nasdaq with a market capitalization of $3 billion, and around 12,000 people working in almost everywhere in the world.


I have this fantastic real business case with Vistaprint to move from one country to another, to move organically, to move through M&A. To move from Europe to the US.When I left the operation of Vistaprint, I decided to create a platform to help other businesses being global because, at that time when I was managing Vistaprint, we were always looking for executives in the country we were getting in. It was tough because no partner was really suitable for our need, for our pace, in terms of cost, in terms of flexibility, in terms of reactivity. The big international headhunters were not adapted and suitable for us.


So I thought, okay, let's put up a platform, let's certify some executives and set up a platform in order for other businesses which are growing internationally to quickly get the right candidate at the right place in a very, very reactive mode, in a very flexible mode — and I can speak later about that — with low pricing compared to what the traditional headhunters are pricing their salaries.


This is the idea of CEO Worldwide, to be the disruptor of international headhunter industry, like we have been doing with Vistaprint, a disruption in the printing industry.


What is happening in the International Executive Search Industry?


Two things. First, the major actors, traditional ones, the big headhunters, they have some hard time to adapt with technology, with pricing, with flexibility. Because they’ve been doing executive search for 40 or 50 years in a different world. Today a lot of things are changing. Like I said, technology and a lot of things need to be adapted. So these headhunters, for me, are not suitable for companies which are expanding very quickly, developing very quickly, and looking very quickly to the right competencies at executive level in the right country.


So we have traditional headhunters which are not anymore suitable. Then a big event with big new players came along with the social networks like LinkedIn. These social networks are — how would you say? — are trying to do this matching and selection of executives, but they are, I think, lacking expertise in terms of understanding what the business, what the client needs, what type of profile they need. So they let the client decide and select and match by themselves, which I think is lacking some added value here.


There is no human interface, and for me, executive search is really human-based. You need to talk with somebody. You need to understand that your consultancy is understanding what you're facing in terms of issue or opportunity. So basically, they are not the right response for a quick service, a fast service in terms of cross-border resourcing executive resourcing, especially. At the end of the day, they are not so cheap. It seems like the social networks are cheap. Okay, you can post your job offer and receive hundreds of CVs — easy. But you have to deal with that. And this is costly. This is a lot of energy, a lot of time. And at the end of the day, this is probably more expensive and not responding to the need that a lot of companies are having, a very fast access to competency. This is number one.


Second is to have a partner who can really provide you with the flexibility. It could be a temporary resourcing need. It could be a permanent resourcing need. It could be a mix of these, from interim to permanent. They are also not providing these pricing flexibility and the risk sharing that CEO Worldwide, for example, is putting in place. I’ll explain myself about that.


So far, the business model in the executive search industry has been always the same for, like, the last 40 years. First a retainer. When the client is asking and signing for a search, he's already paying one-third of the fees. Then you receive a selection of candidates. Then he's paid two-third of the fees. He has not even found the right candidate. It's only when they select a final candidate and they recruited him or her that they will pay the third part.


I think it's not fair for the client. At CEO Worldwide, what we decided is to go 100% success fee, meaning that we are taking the risk of working for the client at no cost up to the point where when he is happy with one of the candidates we have been presenting. Therefore, when he is recruiting this candidate and only when he is recruiting the candidate. He has no need to pay anything before.


Secondly, I think is important to change the way the fees are calculated in this industry. Up to now, the headhunters would apply a percentage of the yearly salary of the executive to calculate their fees. I believe that this is not fair for the client again because obviously, most of the headhunters are of a kind of hidden agenda in that respect. They are pushing higher salary to get higher fees because it's a percentage of it. At CEO Worldwide, we've removed this hidden agenda, or potentially that agenda, in setting a fixed fee for all the regions in the world. Like, for example, if you recruit an executive with us in Europe, it will cost 25,000 euros. If you recruit an executive in the UK, it will cost you 20,000 GBP. If you recruit an executive in the US, it will cost you 30,000 USD, etc., etc., region by region.


So that the client has full transparency in terms of search fees. He knows that there will not be anything until he is recruiting a candidate. This is what I call a disruption in terms of business model compared to traditional headhunters.


What should be done to address these disruptions?


I believe that the right partner in the executive search for clients should be not as today too slow, too rigid, and too expensive, meaning that what we try to do at CEO Worldwide is to disrupt in all these categories. Too slow, yes. It shouldn't take a few month to recruit an executive somewhere in the world. It should be a matter of days. It's what we manage to do at CEO Worldwide.


Second, it should be flexible. Today, a permanent position is not always the best-case scenario. Sometime in certain circumstances, you need to recruit somebody temporarily. And if you need to propose something permanently, you can do that afterwards. But a lot of interim assignment that we're dealing with are only interim assignments, and they don't need a permanent position. So having this flexibility between interim and permanent is not something that the headhunters are proposing. We are proposing it at CEO Worldwide.


The last point is about the cost. Again, having some retainer upfront, not good. I think not fair for the client. Having a percentage, the fees as a percentage of the yearly gross salary, is not fair for the client. Fixed fee is fair for the client, and it's what we're proposing at CEO Worldwide.


How can companies start taking advantage of this service?


It's any time. Our service is open 24 hours and almost seven days, because we're working in all the regions in the world, so we're working in the Middle East and India on Sunday, and we're working every day of the week. We have a platform that could be accessible on the internet. It's It generally takes, like I said, about seven days to 10 days maximum to provide to our clients a selection of our best executives for a given job offer or interim assignment also.


Thank you for sharing today, Patrick.


Thank you very much, Dustin.



About Patrick Mataix






Patrick Mataix



Founder of CEO Worldwide Ltd


LinkedIn Profile

I interviewed Michael Hetzel who discussed 'Not Just Logistics Anymore'.







Can you provide a brief background of yourself?


Well, sure. First of all, thank you, Dustin. It's a pleasure to be here with you. I'm looking forward to our chat today. I've had 18 years in manufacturing, nine and a half years of those as CEO of an injection molding company and metal stamping company doing precision work. During the '90s, we were exporting, kind of a fish going upstream compared to all the exporting that was happening.


The last 13 and a half years, I spent with a third-party quality firm managing the North and Latin America division. Third-party quality, or 3PQ, of course, is basically helping people get what they pay for, primarily in long-distance supply chains. And during that time, we took the company from 10 to 38 countries of presence. During that course, I had the visibility of a thousand supply chains, and I can't tell you what any individual company was doing, but I certainly have a lot of information on watching the evolution of these supply chains.


These days, I'm consulting with companies in various areas and at the same time, if someone has a bigger project or a company, I'd be delighted to look at that.


What do you mean by "not just logistics anymore"?


Well, that's a nice big question that we can cover. What I'm saying is that there are major changes occurring. It's not just routing and  logistics. We have changes being facilitated by technology, not being defined by it, although in some cases, people are mistakenly letting the technology define in changes. But it's being facilitated by technology. Recently this year, we have changes being driven by politics. And with the new administration in the US and the potential for impediments to imports, this adds a strong additional force to an impulse that's been there for some time, and I'll get to that in just a minute.


But along with the technology, it's more of a facilitator. We have IIOT, industrial internet of things.We have data overload because the analytics can't keep up with the generation of data. We have a nascent program of robotic process automation or RPA, which is not just for credit card payments anymore. But of course, things have to be defined in order for RPA to be developed for the analytics. Things have to be defined because right now, we're just collecting data because it can be, more so than because it should be.


Now nothing I've said or am going to say is absolute. There is no always. There is no never. Certainly, there are enlightened companies and company leaders that are following some of the channels that we'll be talking about here in this rather brief overview. But by and large, we're just seeing the emergence of quite a bit of this. That's why we're still seeing in the literature people talking about the technology of supply chain, and they're talking about routing  in logistics. And certainly, the technology is very enabling in that regard.


Now something that I've been speaking about in my lecture practice and articles I've published over the last 17 years is that ultimately, the most logical basis for manufacturing is to produce in proximity to market. Nothing gets more valuable riding on a boat. Let's put it that way. With the agility of proximity to market in the face of shorter product life cycles, mass customization, the cost of warehousing, the diminished advantages of heretofore low-cost areas are all contributing to what I believe will ultimately be — and I don't have an exact timeline. If I had that crystal ball, then that would be a great thing. But it's moving in that direction, has been for some time.


So what does proximity to market give us? Agility.What's an example of it? Well, if you need a 100-line manufacturing facility, and half of those products, say, go to Asia and half of those products go to the Americas, ultimately it's going to be a 50-line factory in Asia and a 50-line factory in the Americas. And I think that clarifies the type of structure we're talking about. The initialization of factories, for instance, with today's automation, there's a much shorter learning curve and much easier in the sense that the same program on the robotics will work in China or Indonesia or in the United States or Mexico. Same thing with Europe and so forth.


This is where we should be taking our new look. We shouldn't just be improving what we've done for years and decades. It's time for disruptive change. At the risk of maybe upsetting a couple of people or maybe just one, the world's not flat. It never has been, except for the transfer of data. It still takes time for that boat to get across the ocean. It still takes extra warehouse space for the additional inventory and all these other issues associated with long-distance supply chains. So that may be a great title for a book, and it sold a  lot of them, but the world will never be like that except in the technology world where it absolutely is.


Years ago, we were designing molds in three countries around the world so that we were passing off the designs on a 24-hour basis. Instead of trying to have an engineer work  the 3 AM shift in Chicago, we'd have somebody in Asia and someone in Europe.


So those kinds of things do flatten the process, but we're dealing with the physical products. That's where I'm coming from on this discussion.


Now market opportunities, you may find if you examine this, rarely are market opportunities overlaid in the design of supply chain architecture. So we have these supply chains stretched out in different areas, often chasing lower costs, chasing materials, or chasing the input suppliers so that we don't end up with remote islands of production. But at the same time, we may have two or three options, and without the market overlay, we might miss that one of those positioning options, puts us in a perfect spot to not only produce for our supply link but to produce for others, consequently creating a new market advantage for the company.


I'm not giving that much time in words but that's one of the biggest tenets  here that we're dealing with. You overlay those. You might see a whole different picture for your supply chain architecture. You may not. It depends on the product. It depends on the processes. It depends on many regional issues and so forth.


I coined a term back  in '06. It was published in Mexico Now, and it's called "Strategic Overshoot."And strategic overshoot — forget the military version — in supply chain is extending the supply chain far  longer and distant than it needs to be without fully rationalizing the position. I really said that in response to that period where China manufacturing for the West became in many ways a fad. And you may recall people reading in the trades, "We went to China, and didn't save money." I consulted with some of those of companies and stopped them from going because it was an assumption that was not valid. It's still, to some extent, present.


These are some key challenges in that area, avoiding strategic overshoot, creating market opportunities through the supply chain architecture, pulling the supply chain in closer for agility, using IIOT and RPA for data analysis with trigger points built in so that rather than being overwhelmed by the data, we filter the data to these key metrics and parameters.


The last area that I'll point out is on the culture side of this. Humans can't simply be the backups for the machines. And unfortunately, that's exactly what's happening in highly automated plants. And that's what's changing the attitudes of some of the workforce — remember, there are no absolutes — but some of the workforce in that they're perceiving themselves as less important. They're being allowed to perceive themselves that way because functionally, that's all they really are doing — walking around, squirt some oil here, this thing broke down, put in a new module, that sort of thing.


We have to create new value drivers to optimize the human condition in these factories. I've been optimizing the human condition for decades in my career. It's the human condition and how it's configured and what it seems like. That's what's changed. Obviously, the results are going to come from the performance. Frankly, we give too many ocean cruises to our television sets and not enough ocean cruises to our employees. That may sound flippant, but give it some thought, and you'll find that that really has a tremendous effect on workforce loyalty, workforce attrition, workforce progress, and dealing with the cross-generational issues, particularly when we look at our latest group, the Millennials. That could be another discussion in itself. I've worked with quite a few over these years of my career.


So in overview, this is why it's not just logistics anymore because we shouldn't optimize what is obsolete. We shouldn't apply a layer of technology over something that we need to evolve. This is actually one of the most fun times I've had in decades, is working with this sort of change rather than just brushing the rust off of old methods or creating new methods. We're actually changing the foundation. And it's a very exciting and historic time for manufacturing. And I sincerely hope that this short presentation has proven to be useful to your readers.


Yes, thank you, Michael. These are very important points. And I'd love to speak with you in the future where possibly we could go into more depth in some of these areas.


That would be my pleasure. I'd be delighted.



About Michael Hetzel







Michael Hetzel


CEO, President, COO - International Trade Specialist Mfg or Services


LinkedIn Profile

I interviewed Ketan Badhwar who discussed Future of Freight Forwarding with Disruptive Technologies.







Can you first provide a brief background of yourself?


Sure, Dustin. I have been in the freight forwarding industry for the last 15 years. I started my career in India and then moved to Australia in 2010. And since then I have been working in various roles within the freight forwarding and the overall supply chain and logistics industry.


Most of my roles have been customer facing. So I visit several supply chains every year, look at what they are doing, what are the best practices, and then for my company, I try to position my product and services in front of the supply chains.


What is happening in the industry in terms of disruptive technologies?


There are inefficiencies in the logistics services industry. This is an industry sector which is worth billions and billions of dollars. And you would see that the market is actually expanding due to rapid pace of globalization. In terms of disruption, we are looking at new technologies such as drones, self-driving trucks, uberization of warehousing and visibility through the use of RFID chips. So logistics providers are becoming more transparent, and it feels like it is also becoming easier for new organizations to enter the market offering similar solutions.


So essentially, the market is more open now. It is getting more difficult to identify a competitive advantage, because new technology has made it possible for more people to enter the field.


How can these challenges be addressed?


These challenges can only be addressed by adopting some of these technologies. I understand the companies, especially the large ones. Due to corporate structures and sheer size, they are not very agile. So they find it difficult to move quickly and adopt to changes. And that means that these companies start losing market share to innovative players.


So the best thing to do is to look at these technologies and understand their ROI. Look at the benefits that these technologies have provided to the customers. If you cannot innovate — because brand new ideas require time and money to research and to develop, then it's better that you simply look at already existing technology, ready available, complementing your overall product and services portfolio.


Other than that, you can choose to sit back and do absolutely nothing. But its likely that you will  losemarket share. And worst case scenario, you company might become redundant in the near future.


Could you talk about any success you've seen, or how to implement these changes?


Yes, I have. For example, in my organization, we are already successfully using drones in  our warehouse environment to keep count of inventory. We are also using electric trucks for inner city deliveries in China or Mexico to reduce our carbon footprint. Innovation is in part of organization DNA.

Coming back to the example of drones, it was a concept which was initially made popular by the likes of Amazon. But you'll be surprised to know that a lot of supply chains have already deployed drone technology in different areas of their operations. Think of Amazon last mile delivery by a drone. Drones are also being used to providing spare parts within the oil and gas industry at offshore locations. So drones are very good example of the fast progress our industry has made!


Apart from that, we are looking now at asset lean companiesproviding online platforms to aggregate small service providers helping clients leverage from local service expertise . So for  example, now you can get APIs and EDI messages from all the service providers. You can integrate those messages into one place. That means that for your customer, they would have seamless visibility of their entire supply chain. They can look atreal time the status updates of their cargo flow which provides greater planning security and enables management by exception. Client can also improve their demand planning. For example, GEODIS offers the IRIS platform which provides seamless visibility of end to end supply chain down to SKU level.


The question is how many companies are realizing the benefits of these technologies and how quickly are they deploying in this space. Because what I experience in the market is that we as an industry are not fast enough to develop cutting edge futuristic solutions, and that's where the the startups are succeeding and giving established players sleepless nights and a lot to think about.


Thank you for sharing today.


No problem, Dustin. Thank you for inviting me.


About Ketan Badhwar







Ketan Badhwar


Supply Chain Solutions and E-commerce Lead | Assisting your supply chain to become more agile.


LinkedIn Profile

I interviewed Glenn Rosenholmer who discussed What it takes for Truly End-to-End Supply Chain Collaboration.







My name is Glenn Rosenholmer. I'm sort of a Senior Advisor. I currently help clients to find stability in their operations. If they are a global player and call for many dimensions, both dimension, and layers, and when that works, I work with needed improvement. It often is to build something that should be able to stand and work for more than the next month. It has to work for two or three years at least. So I also see this as a very, very challenging mission or ambition I get from my clients.


Why is this not done very often? Why is it so important?


Well, I think some ambition is required because of the experience and the fortune to be working in several types of businesses. I do think I have some insights to the key factors. The fact is that collaboration is not set up using enough time with the roadmaps and guidance that really, really need to be in place before you go ahead. You have to draw the map, and you have to draw the map in several different dimensions before you start the costly start of doing the physical work.


You also need expertise from all the functions. Unfortunately and typically, only one or two functions, drive an initiative. You're not getting the focus from all the functions — meaning sales, marketing, and logistics, production, distribution. All the expertise needs to be there to give an expertise. And the angles they can provide to do really good work are a solid network.


How do you identify meaningful relationships in your supply chain?


One way of putting it is that you obviously need contracts. You need a contract manager that the supplier follows with certain procedures and so on and key numbers that would set up in terms of lead times, etc., etc. But I have seen a tendency of several decision makers, they built a lot of overconfidence, much too much, I would say pressure for us is on the "right document. ". When it's written, it's perceived as some sort of written law. And life, day to day, is not that. It's very pragmatic. It needs to work on a daily basis, on a weekly basis. Therefore, I do believe that the trust between people and that people should build solid relations and respect for each other, even if it's a supplier or it's a customer. But it's business to business, and it's people business all the time. It doesn't matter which type of industry.


Therefore, I think many, as I see it, have overconfidence in written documents, and they should be focusing on the solid work practice in the network.


Where is the real opportunity for supply chain professionals and executives? What should they do to get started?


I've just written a short article on LinkedIn articles network for business people. I think I was not too explicit about the fact that you should never, underestimate the bull-whipped effect. The bull-whip effect and what it can cost you if you don't think about added complexity. For instance, when you go into another country, into a country or continent with your product, it's so easy not to think the whole way through, and end-to-end thinking, it can be very easy to forget.


Another thing is everybody talks about the voice of the customer. But you need to really find out what is the customer's real interest. You need to do your homework and not only by using some sort of questionnaire. You need to meet them, and you need to understand what is perceived as added value. You have to prepare yourself to do the best for your operation and your business.


So I would say one idea, if you're in the workshop status, and you're in the beginning, you should actually have a meeting— you can call it meeting or workshop. Decide that for yourself. You need to have the sort of voice-of-the-customer status. How have we gained insight in the customer's perceived added value? How did you do it? You should also start every session of workshop...what is the Bullwhip Effect as perceived for the moment? We learn from every day and have to add that as well as a guide.


My recommendation is start with those two — the-voice-of-the-customer status and what is the foreseen Bullwhip Effect and try to guide for self in the logistic initiatives to deliver a solid network by repeat that, and never forget it. That's my quick advice.


Well, thank you, Glenn, for sharing today.


Well, thank you, Dustin. It's good to be on, and I hope you have a really good day, and I hope that I can add some thoughts if there’s another issue or business area that somebody needs to have input in.



About Glenn Rosenholmer


Glenn will be in Lisboa 14-16 May. He currently works in Supply Chain Fashion for a Luxury Premium trademark.







Glenn Rosenholmer


Management Consultant and CEO


LinkedIn Profile

I interviewed Richard Sherman who discussed Segmentation is the Key to Survival in the 21st Century.







It is great speaking with you again, Rich. Last time we were talking about the trends in supply chain for 2017, and as we were talking, you were discussing segmentation analysis. My question is what makes it a critical issue for the future?


That's a great, great question, Dustin. Again, it's a pleasure speaking with you again. I think the best way to characterize the markets are changing in 2017 and beyond is, there's a gentleman by the name of Joe Kraus who is a dot-com pioneer. He currently is with Google Ventures, and he got quoted in a BBC Finance article maybe a year or two ago. But he said,“The 20th century was about dozens of markets of millions of consumers. The 21st century is about millions of markets of dozens of consumers.”And that's a major transformation in thinking because we go back to the 20th century, and we had mass marketing and, basically, you could go after very large segments of millions of customers. Today, you've got millions of segments of dozens of customers. And so the internet and mobility is basically creating an era of personalization.


Whatever you sign on to Amazon, it's going to suggest to you different purchases based on your past behavior. We're seeing more and more push-ads to your smart phone based on your behavior. So we're collecting more and more data. I know we talked about this a little bit last week and the week before, but big data is what's driving a lot of things, because the new internet infrastructure is giving us an infrastructure that is very, very dada-rich, which enables us to do this mass-personalization or personalized customer experience, if you will.


Why is that important to a supply chain person? Well, if I'm basically marketing and selling to individuals, that means I'm going to have millions of deliveries as well. So as I talk about personalization in a marketing perspective, I'm also talking about personalization in a delivery perspective, because not everyone lives in the same type of location. So you have urban last-mile delivery, which is very different than suburban last-mile delivery, which is very different from rural last-minute, last-mile delivery. So there are certain zip codes in this country that nobody wants to ship to because the population is so sparse, and then at the same time, there are other zip codes that nobody really wants to ship to because the population is so dense.


So it's critical that companies really look at, first of all, their products. They have to segment their products in terms of the different attributes. How easy are they to deliver? Are they transportation-cost heavy? Are they easily mailed, for example? Or easily parcel packaged and shipped? How attractive are the products to a particular market segment? So understanding your market segments becomes really critical. If you're selling high-value, high-priced items with high shipping costs into a lower-income segment, you're probably not going to be successful.


So it's critical to understand the different market segments and how consumers and customers behave within those segments so that you can begin to tailor your sales, marketing, and supply chain or delivery characteristics and attributes to those particular segment attributes and the revenue that you choose to derive from that.


Profitable supply chain response is going to be critical to companies' success in the future. That means that I have to be able to shape demand to certain segments because if I have a price-sensitive segment that I'm marketing to, I'm going to want to provide to them low-cost distribution and delivery options. I may want to incent them to pick the product up in a store. So I may want to price my items a little differently based on what the accepted delivery method is by a particular segment. So that segmentation becomes critical to laying out a supply-chain network strategy and a fulfillment strategy. Should you outsource your fulfillment, for example? Are you selling to segments that are sufficiently small enough that you're not going to drive the level of revenue that's going to enable you to afford a highly distributed network for last-mile deliveries? And in that instance, you may want to consider outsourcing even to an Amazon, who we really have to question whether they're in the retail business or the fulfillment business or in the internet marketing business.


But knowing those segments, knowing what the characteristics and attributes of those segments that you're serving, are quickly becoming the fiber of corporate strategy. Picking the right segments, picking the right delivery methods by segment, incentivizing those customers or consumers within those segments to elect the most profitable response to you, while at the same time maintaining your competitive position within those segments, are the keys to survival in the 21 century. So in the absence of segmentation, you're probably throwing darts against the wall or throwing something else against the wall and hoping that it's going to stick. And there's a really good chance that extinction could be in your future.


Any other questions, Dustin?Or does that make sense to you?


Yeah. Are there any significant obstacles to taking action on making this change to be doing segmentation like this?


That's a great question, and clearly -- and I think we've talked about this in the past, but it's good for people to remember -- master data management is really becoming the business foundation for growing in digital markets. So having the data right... If you have masses of data of incorrect data, if your data quality isn't there, all the analytics in the world isn't going to help you. So getting your data right is critical. Getting your data-collection infrastructure is critical. And one of the big barriers here is the level of collaboration with your customers and with your suppliers.So you have to have a high level of collaboration. In the industrial business-to-business space, you have to have a high level of collaboration with your channel partners, because they are going to be the ones that are going to provide you the data that you need to do this level of analytics.


On the other hand, if you're capturing data direct from the consumer through opt-in programs, through mobile apps, through various Google data and sourcing your data from the various search-engine providers, etc., you've got to be able to have a highly collaborative relationship with them to have access to that data. So collaboration is a barrier. In my book, I talked about the key to leader city is collaboration, so you have to have a high level of collaboration. You have to get the data right. You have to have a good foundation of master data management in order to support the analytics that you need. And then, obviously, you have to make sure that you have analytic and insight capabilities within your staff. Or, again, you may want to consider outsourcing those analytics and insights to the various [inaudible 00:09:25] service companies that provide those services. Does that answer your question?


Yeah, definitely. Thanks for sharing today, Richard. I look forward to our continued discussions on the important trends in supply chain for 2017.


That sounds excellent, Dustin. It's always a pleasure to share with you and with the overall Kinaxis community.



About Richard Sherman




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Richard Sherman


Senior Fellow, Supply Chain Centre of Excellence at Tata Consultancy Services


LinkedIn Profile

I interviewed Charles Brewer who discussed Cross-Border E-commerce Trends, a Global CEO Perspective.







Charles, can you first provide a brief background of yourself?


Sure, Dustin.And hello, from a very warm Singapore. So my name is Charles Brewer, and as you mentioned, I'm the CEO for DHL E-commerce and I've been with DHL for the last 33 years. I cover all territories with the exception of Europe. So the Americas, the Middle East, and Africa, and Asia Pacific.


What is cross-border, global e-commerce, and what are the key markets and trade lanes for cross-border?


Just to contextualize the question a little bit... I think most of your listeners will be very familiar with the huge growth story that is e-commerce. So very, very exciting.Has been around for the last 10 years, actually. The first e-commerce has been somewhat debated as to whether it originated in the UK or in America. But still very embryonic, still very new, but hitting the headlines both from a retail and online perspective but also from a logistics perspective. So it's very, very exciting and forecasted it to be around $3.4 trillion by 2020. So the value of gross merchandise value, around $3.4 trillion, which is enormous. And with domestic B2C e-commerce growing at around 10% and cross-border, which is what we're going to talk about today, the very exciting cross-border, growing even faster from a slightly smaller base, by 27% through to 2020, and it will have a value of roughly a trillion dollars, about a third, or a little bit over a third of total e-commerce sales.So very, very exciting.


In addition to the growth of these markets, are there any other reasons that this is important?


I think... I mean,it's clearly hugely exciting. E-commerce as a subject is clearly very exciting but also presents a number of challenges, both for the seller or the retailer or the marketplace or the brand, and also for the logistic company, and also for the consumer, which I’ll talk about a little bit separately. Again, just to share some numbers to frame the size of the opportunity and why we think it is so exciting, why DHL does, and why I do. Those numbers I quoted to you just now should be put into the context of the e-commerce or online sales as a percentage of retail sales still represents something like 10 or 11% globally. So about 10 or 11% of what's bought from a shop is boughtonline. So the upside on this particular segment, this sector, is still significant — 10 X upside and represents hundreds of thousands packages globally already.


So from a logistics, the reasons to get into this space are fairly obvious. Big market, big opportunity, still hugely embryonic, still the playbook for how to actually create a sustainable model and last-mile still relatively unwritten. So very exciting in terms of how to crack the code and how to go out both arcross border and domestic B2C.But a huge, huge, huge upside.


Just to share some other numbers with you, around 1.6 billion people today shop online, about a fifth of the world. So again, still lots of people out there who don't shop online, and they will eventually. So again, as I mentioned already, very, very embryonic. Again, as I said earlier on, some of the markets, the biggest markets for e-commerce and for cross-borders, if you look at the top 10, 20 markets, the US and China clearly are the biggest by some stretch. But then you've got lots of really exciting ones coming through underneath that. So you have Japan as the third biggest market. The UK is the fourth biggest market, South Korea the fifth, Germany, France, India, Canada, Australia, right down to Russia and Brazil. So they make up the top 12 countries in terms of e-commerce originating volume or e-commerce spend. But as I said earlier on, there are some really exciting regions that are starting to emerge is also very exciting. So places like Latin America. So outside of Brazil, which represents about 40% of e-commerce sales in Latin America, you've got countries like Chile, Colombia, Mexico, a lot of other countries that are starting to... So Latin America is very, very exciting.


Then if you look at the Middle East and Africa, still fairly embryonic in terms of its percentage of online sales in that region. But recent events including the launch of a brand new marketplace there called, which a billion-dollar investment aiming to rival the big players that exist globally. They just started and lots being written right now around Latin America and how exciting that is. And then you come across to where I'm recording from today from Southeast Asia, which is really, really exciting. You’ve got 623 million people in Southeast Asia alone. Andthe e-commerce online [inaudible 00:05:32] retail ranges from 0.5 in Indonesia up to 4 or 5% in Singapore, so still right at the early stage of the curve with a really improving internet connectivity, really improving infrastructure. So I think we'll see Southeast Asia equally grow very, very rapidly.


So all in all, huge market, massive opportunity, massive volumes already. Lots of exciting countries and markets and regions starting to come into the fray in creating huge growth stories.


How should it be done effectively?


So as I mentioned at the start, there are a number of challenges for most companies sort of entering into the e-commerce space. And I suppose you know, as a starting point, to understand why do consumers buy online. So why do people go online as opposed to going to the shop in the first place? Or why is this global phenomenon taking place?


Number one, I think product availability. Depending on where you live in the world, you can't always access everything you want to buy very easy from your neighborhood shop. So if you can go online and choose whatever pair of trainers you're looking for in whatever color in whatever size across a marketplace or across a brand retailer, that's one. Availability.


Secondly, obviously, is appealing offers. So I think consumers are getting quite savvy around how to buy products, both domestically and cross-border and do so at the most affordable price. Lots of great offers out there — Black Friday, etc., 11/11 in China with Alibaba. If you look at the sales that occur around the world and what goes on sale, some of the offers are unbeatable. So appealing offers.


Better conditions.So much easier to do it.And trust is really interesting. A few years ago, trust was a big impediment to e-commerce growth, but now we're seeing it the other way around. People are actually saying that it's actually more trustworthy to go online and buy direct from the manufacturer or direct from the brand than, perhaps, from buying from your local stores. A better chance of the goods being the right goods and not counterfeit and so on and so forth. So that's quite an interesting growing way, reason why people buy.


In terms of what sort of categories do people buy... Again, apparel. Globally, apparel is the biggest one. So people love shopping for fashion, love buying t-shirts, dresses, bags, shoes, suits, shirts, and anything else for that matter.So apparel is huge already.


There's some really interesting ones, new categories that are starting to dominate and starting to grow very rapidly in terms of...particularly in cross-border, actually. So beauty products are growing really, really fast. Pet care. You would never have thought that that would be a big category. It's growing super fast. Food and beverage, and I think we're getting more and more familiar and used to having our lunches, dinners, breakfasts delivered at home or delivered to your office or whatever else. So that's growing. And sporting goods. So four new categories starting to take center stage.


As I mentioned, it's not all [inaudible 00:08:47]. There are challenges. So things, these things test DHL on a daily basis. But that's what makes this fun. One is inadequate physical addresses. So I spent a year or so in the Middle East, as I think you know, Dustin. And trying to find delivery addresses in the Middle East can be a problem in itself. But they're not alone. It's not just the United Arab Emirates where address or adequate address is an issue. So even in Southeast Asia, I was up in Indonesia just recently, up in Thailand recently, up in Malaysia recently. They have the same sort of issues. That is true of Africa, and it's true of many of parts of the world. So finding the address to deliver to is obviously an on-going concern.


Payment methods is really interesting. In Europe, cash on delivery or paying for the goods when the courier delivers is below 2 or 3% whereas in emerging markets — and Southeast Asia would be considered that — it can be upwards of 60 or 70%. So people having access to cash, credit card systems to pay banks, whatever it may be, to pay for the goods can be an impediment to growth.


Customs regulations, again, if you're doing cross-border, there are some challenges around making sure you know what the customs regulations are and how to deal with that. So consumers and customers get very, very upset if they receive their goods — they're wonderful t-shirts or whatever it may be that they bought — and then they find that the duty and VAT on delivery is four times the price of the good. So customs regulations and clearance can be a bit of a challenge.


High-speed, secure connectivity, I mentioned, is improving significantly, but there are still places where it's not great. And a number of other ones besides. The simple reality is that something like 94, 95, 96% of all goods delivered around the world are still delivered by a courier and a vehicle to a home address, which I think is going to change significantly over the coming years, but in itself, creates problems because people are not at home. So that causes issues for both logistics company, a second or third attempt,plus for the consumer being dissatisfied that they haven't received their goods. So a very common thread whether you look at Europe or you look at Asia or you look at the Americas, or you look at the Middle East and Africa. A very common thread in terms of consumer satisfaction.


We see the trend, obviously. The consumers are much, much more demanding in terms of how, when, and where they receive their package. And the dissatisfaction level if you don't get that piece right, goes up incrementally. Something like 60 or 70% of consumers globally are generally unhappy with the delivery experience. So from a DHL perspective — and I'm sure the logistics industry in general — we're working very hard and fast to find new, creative ways to get the order delivered and delivered the way that the consumer wants.


And then lastly, in terms of e-commerce companies, brand e-tailers, thinking about going into cross-border, going back to cross-border, which is where we started, things like being very clear about which markets you want to enter into... So if you are in the petcare goods, as an example, in that segment, and you're thinking about entering a particular market globally, what other petcare goods or internet or brands or marketplaces exist there already? Knowing which countries give you the best opportunity to be successful is a good starting point.


The right assortment, really understanding local tastes and rules. This is absolutely true. It was true in B2B, and it's very true in B2C, which is fully recognizing, understanding how to sell your goods in geography A is different to geography B. So how you present your goods on your website through to the incentives you use through to terminology wording, language, all those sort of things are really, really relevant. So making sure you really understand the local tastes and rules.


Go local, think local. So whilst your website... I'm sure you're very proud of the website you have in country X. It may not be the same that you need in country Y. So let the shopping experience feel very local as best you possible can.


Warehousing and fulfillment clearly growing.So the omni-channel delivery experience growing fast into satisfied consumers demand for "I want it today in 10 minutes time, and I want to pick it up from the Starbucks downstairs" requires a set of supply chain, fulfillment, and warehousing processes and approaches that allows you to fulfill that order in the way the customer wants.


So if you're shipping cross-border, and you're going from the US to Australia, that's not going to be delivered same day, same hour. So working out how you can put product closer to your customer so that you can satisfy the on-demand requirement that consumers have these days.


Lastly — and given that I'm from DHL, a very appropriate topic — making sure you choose a great delivery provider. So, again, everything tells us that generally speaking, consumers are super happy, super excited with most of their web experience. They're going online and choosing apparel, beauty products. The websites today, fairly simple to set up, very X and UX, good user experience, good user interface, and where it falls down, for the most part globally, is in last-mile, in logistics. So making sure you partner with the right deliver company to satisfy the structure you've developed.


Thanks, Charles, for sharing today.


You're very welcome, Dustin.



About Charles Brewer






Charles Brewer



CEO at DHL eCommerce


LinkedIn Profile

I interviewed Richard Sherman who discussed Supply Chain Trends 2017: Analytics.







What about analytics? How are the analytics done in a supply chain ecosystem?


Great question, Dustin.And I think, basically, where the analytics come in is as we become systems, as we become connected via the internet, as we become connected their mobile devices, so we're an increasingly mobile group... So as individuals and markets and companies and businesses all become connected seven days a week, 24 hours a day, and we begin collecting more and more data in real time... So, for example, I may have a wearable health-monitoring device that monitors all of my feelings, all of my hunger, all of my heath activities. It may determine, before I do, that I'm going to crave a meal, or I'm going to crave a beverage, or I'm going to have need for some type of a medication, or I'm going to need to have some type of a treatment. Or maybe I need to step up my pace a little bit because I'm not burning the calories that my goals have been set in my wellness system.


And so as I'm collecting all that data, that data is transmitted to all of the nodes in that ecosystem and then now companies have data about every individual within their market echo system, every intermediary that they're dealing with within their channel. So we have an integrated channel-wide data collection system, which is now feeding that entire ecosystem with real time data about everything and anything in real time, including where it's occurring, because — don't forget — we've got a GPS system within all of our mobiles and all of our wearables. So we can also service by location where that individual is and where that person is. So I know who they are, what they are, and that kind of led to the discussion we were getting into last time we talked, about security, privacy, and data ownership.


But from an analytics perspective, I now have more data than I ever have been able to dream about. So master data management really becomes a business discussion and becomes vital to survival in the market. Because now I'm sharing data. I'm collaborating with data more than ever before, and so I have to be able to harmonize that data not only across all the different functions in my enterprise, but I also have to harmonize it with all of the other participants that I engage with in my market ecosystem.


Regulatory compliance is going to drive more and more digitalization. So automotive parts tracking, food ingredients tracking, pharmaceutical ingredients tracking, counterfeiting, all of those processes and all of that information are going to become more and more governed and regulated than ever before. So again, I have to be thinking digital. I have to be thinking ecosystem. I have to think of all the participants of my ecosystem.


So from an analytics perspective, what I have to first do is I first have to...the first level of maturity, if you will, is having harmonized, descriptive analytics. And the descriptive analytics really define all of the characteristics of product and supply network attributes. So it's very descriptive about all of the data and all of the product and all of the movement, all of the networks and nodes, all of the transportation lanes and characteristics. So I describe all of the attributes of everything within my ecosystem. Then I can begin to apply sensors and monitors and other Internet-of-Thing types of devices that can monitor the health of that ecosystem, the movement of goods within that ecosystem, any changes of control within that ecosystem, are beginning to basically now collect data about the condition or environment or ownership of all the physical materials that flows and transforms through the network.


So this is where blockchain comes into play. And companies are beginning to look at blockchain, which is the underlying technology that supports the capability to use bitcoins. So what the blockchain does is it audits and logs and tracks every transaction that occurs electronically within that market ecosystem and validates it and validates it for its accuracy. So now I'm using blockchain to address some of the security and data ownership of privacy issues.


Now that I'm collecting all this information and all this data about the condition and the environment and the ownership of the physical materials, now I can begin to apply logic to that data to begin to assess performance and compliance or deviation to my plan. So now I'm beginning to move into a more diagnostic use of analytics.


So now I'm beginning to diagnose where am I having a problem? Or what's happening in my network right now that requires my attention? I was planning for a spike in demand to occur associated with a promotion, and that spike is growing faster than I anticipated. I need to be alerted to the fact that the variation from my plan is great enough for me that I have to take some action to that.


As I begin to understand those diagnostics, I can now begin to develop predictive analytics. And what predictive analytics do is they leverage business intelligence, artificial intelligence, cognitive analytic capabilities where now we're starting to create decision-support applications that begin to kind of think like human beings and begin to mimic the human brain. And now we begin to start getting into predictive analytics.


So now I start looking at trends, patterns. I'm bringing in external data like the weather, conditions like maybe there's a huge sporting event that's about to occur. So anything that can cause a dramatic change or deviation from my plan, I can now identify and begin to predict what's going to happen. So now I can not only identify at the time something happens that I have to take action, but now I can predict to say, "You know, New England just went into the Super Bowl against Atlanta. It's going to held in Houston. There's a really good chance that we're going to see a demand for all kinds of entertainment related goods. So we're going to need more Patriots hats and t-shirts down there. We're going to need more Falcons hats and t-shirts down there. We're probably going to need more beer down there. We're going to probably need more adult beverages. We're probably going to have to divert a lot of chicken wings into Houston. Well, the Super Bowl in itself is a global event. We may need to take a look at what the consumption of chicken wings are all over the planet.


So now I can begin to predict where and when I'm going to need things to happen. Or I could, in the automotive industry, I can use it to predict when certain parts are going to fail, and I can route the vehicle to a service center before it actually breaks down on the road.


Then once I begin to collect the information about how we resolve all of those predictions and all of those deviations from norm, now I can begin to create analytics that are prescriptive. And here's where I'd begin to take a look at the historical resolution actions, and I can apply an advanced-process control algorithms that are developed not only to predict when something is going to happen but also prescribe a series of actions or options a person can take to resolve the problem that I've predicted in my analytics.


So the sum it up, analytics maturity goes through basically five different phases, and there's no skipping phases. So you've got to develop first, descriptive analytics based on master data management. You have to then develop monitoring analytics, which takes advantage of all the new data collection devices that are being deployed across the network. I then have to begin to develop diagnostic analytics that will enable me to assess performance and identify potential problem areas. Then I can use predictive analytics to bring in all the external data based on those diagnostics to begin to predict when conditions arise that will cause something to happen different from what I've been planning.


Finally, I get the Holy Grail, where now I've got prescriptive analytics, where now we're doing digital collaboration. I'm no longer... I'm basically now managing my supply networks as a process, and my systems become process control systems, and they're constantly monitoring the different flow paths the goods are taking, and they're constantly monitoring if those flow paths are operating smoothly, and they're digitally alerting either systems or people to take action if there's a deviation from plan. That's all going to occur in real time, and so supply chain becomes a digital, smart supply network, or a smart digital-supply network.


Does that make sense?


Yes. Great. Thank you for sharing today, Rich.


Hey, Dustin, it's always a pleasure to speak with you. I hope I shed some light on some of the trends I talked about last time, and perhaps we can plan a time in the future where maybe we can get in and start talking a little about robotics and some of the issues around segmentation and optimization of new and emerging markets.

I look forward to that.


Sounds great, Dustin. Thank you.


Thank you.


About Richard Sherman




1edda92 (1).jpg


Richard Sherman



Senior Fellow, Supply Chain Centre of Excellence at Tata Consultancy Services


LinkedIn Profile

I interviewed Richard Sherman who discussed Supply Chain Trends 2017: Ecosystem Changes.







This is a follow-up interview. Last time we were discussing supply chain and technology trends for 2017, and today I have some more detailed questions about supply chain ecosystem changes, as well as analytics. So regarding this topic, can you first provide a background about this? Why is this important, these two changes and these trends?


Sure, Dustin.It's great to speak with you again. I'm happy we have the time to dig a little deeper. I think the biggest change that is going to occur, that people are going to have to adapt to, is the transformation from traditional supply chain thinking, which is pretty linear. We think in terms of supplier to manufacturer to wholesaler to retailer, the traditional beer game type of methodology, and it's kind of ironic that the beer game approach has led to this linear thinking when in fact, kind of the inventor of the beer game, Jay Forester, really built it to help people understand systems thinking. But as we evolve and as we get more and more data collected in real time, so as information and computing become more pervasive, then we begin to behave more and more like a network as opposed to a chain. And a network is a system. And that network is comprised of nodes and connections that are networked as opposed to perform their operations in a linear or a sequential manner.


So within that network, you have markets. And so each market is its own ecosystem. So when you think of the automotive industry, it's not just tier one and tier two and tier three suppliers feeding an assembly plant which then distributes out to a dealer network which then puts us in the driver seat, is the best way to say it. The automotive ecosystem, actually, is comprised not only of all the parts suppliers, not only all of the automotive manufacturers and dealer, but also, you've got an insurance industry that is tied directly to the automotive industry. So I've got a legal, a municipal revenue generating system which is tied to vehicle operations, so the automotive industry puts us in the driver's seat. As drivers, we may exceed the speed limit. When we exceed the speed limit, we could possibly be pulled over. We could possibly get a ticket. And that ticket generates revenue for the municipalities.


So the other side of it is, driving those vehicles, we sometimes get into accidents. So there's a whole service industry. The vehicles themselves from time to time, need to be repaired. So it's not just auto and body shops, but it's parts distributors. And of course, the automotive dealers, a high percentage of their profit is made in selling it their parts. So there are a whole number of manufacturers that will make similar parts or will-fit parts that could be substituted at a lower price than the OEM part price. And so there's a whole ecosystem around automotive parts distribution and sales.


And of course, the other side of that accident is not only a car that needs to be repaired but it may need people that may need to be repaired. So there's personal injuries. And that brings into play a whole legal system .And again, the insurance system plays a part.


So if we think about a change like an autonomous vehicle, a driverless vehicle, then we have to start thinking about not just how that impacts the automotive OEM but how it impacts the automotive market ecosystem as a system, because if I have driverless vehicles, those driverless vehicles are designed not to exceed the speed limit, not to disobey the law, not to get into accidents. So all of a sudden, municipalities may be finding a major source of revenue in moving violations going away. The insurance companies, if there are very few or no more accidents, the nature of the insurance and the revenue generated by that insurance changes dramatically. If there are no more personal injuries, then we may not need personal injury lawyers or certainly not as many personal injury lawyers.


And of course, then we have this little thing called ride-share services, like Uber and Lyft and Fasten, and so they start to say, well, if we have driverless vehicles, we can create a democratized transportation system whereby people really don't have to own cars. They can just book slots on vehicles that are already in play. And so I can call Uber whenever I need to go from point A to point B. If I need to go shopping, I can always pick up a driverless vehicle that gets assigned to me, and I automatically pay them by the use of the vehicle as opposed to by ownership of the vehicle.

And of course, if the ownership of the vehicle changes, then that changes the nature of dealers and retail sales of stores. Because now, instead of selling cars through a dealership and to individuals, I'm going to be selling cars to large fleets. So Uber's going to buy thousands of cars at any one given time. So the dealers start to go away, and then we begin to see greater volume in automotive sales to fewer parties as fleet ownership becomes the mode and not individual ownership of vehicles.


So by way of an example, what I've done is I've taken one simple market — the automotive market — and I've said it's a system of businesses that are networked together where change impacts us all in different ways. And so if I'm a company today, and I'm beginning to see the digitalization and digitization of my market, how is that going to impact all of the nodes in that network? So if I look at the consumer goods industry, I have to be thinking Omnichannel. And in fact, I have to be thinking Omnichannel no matter what market I'm in, because everything is being sold online. So it may not be an Amazon, but it may be that's selling all the goods that I need to build a house, and because it's online and the middle man is eliminated, the [inaudible 00:08:09] products company may be able to ship it to me for much less than if I were to go to the local lumberyard to get it.


So systems thinking is going to be the rule in the 21st century, and we have to begin to think of how all of these small changes can build up and result a major change to that ecosystem. And now the change becomes disruptive.


And so I think that in 2017, companies have to begin paying more attention to their role within their market ecosystem and how changes are going to occur within that market ecosystem and when those changes are going to become disruptive. Does that make sense?





About Richard Sherman




1edda92 (1).jpg


Richard Sherman


Senior Fellow, Supply Chain Centre of Excellence at Tata Consultancy Services


LinkedIn Profile

I interviewed Connie Wu who discussed Pain Point of Chinese Small and Medium Private Companies to Go Further.







This is Connie WU, I am an automotive purchasing professional with 19years experience in the field of supply chain in automotive industry, including5 years working in tier 2 European company and 14 years working in tier 1 MNCs, covering machinery & equipment purchasing, indirect material and direct material purchasing, purchasing program management and supplier quality management. Before that, I was a teacher for 7 years, and spent 2 years working in manufactories as assistant to senior manager to prepare myself with necessary competence and skills for career development in MNCs. Our conversation today will be from the 2nd part of my career path.


Generally, we buy to print, buyer own designing responsibility; or, buy to spec. supplier own designing responsibility.


We source a supplier via 3C match: Capability, Capacity, Commitment.

capability to fulfil current demand and capability to learn;

capacity to fulfil current demand and capacity to support future growing business;

commitment to establish a sustainable supply chain with a total cost consideration, measurement is QCD (Quality, Cost, Delivery);


Before talking about the pain point, I’d like to share some observation from my 19 years supply chain developing.

I have a habit to visit the plant before reviewing an offer, and I always have a casual conversation with the owner of the company and the employees out of the meeting room separately during my visit.


I visited hundreds of various plants, like metal parts, plastic, foundry, electronic, rubber, chemical product, surface treatment, so on and so on.

If I can see a layout at the entrance of a plant, exit and fire extinguisher can be easily found, I’m happy; if not, I’ll be a little bit nervous.


From time to time, when I visited small and medium size Chinese private companies, I see the in house logistic is a mess, the production line is unbalanced from one station to the other, lack of IE concept, lack of human engineering consideration. Machinery & equipment preventive maintenance plan lack of MRO parts inventory management and emergency plan, incomplete mold profile. Inspection tools calibration not in a good track.


When I talked to the management team, I could not feel any collaboration between departments, between different functional roles, seems only sales know customer’s requirement. the technical guys don’t speak English, not able to directly communicate with foreigner customers, the sales guys mostly major in business English, no engineering background, not able to translate a technical solution professionally.What customer hear from the sales guys might not be same as what’s implemented in the company, this, happened very often with the companies of which the owner doesn’t speak English.


Chinese small private companies mostly start with buy to print business, at startup stage, the business was not so big, the owner decided everything, employees just implemented orders from the owner. When business growing, the Owner’s time and knowledge is not able to cover everything, there is not a team to actively support the business running, consequence arising therefrom: product and service fail to meet requirement and shipment delay. Then, it’s not far away from being quitted. When the owner & founder is getting old, the next generation is not interested in taking over the business, the situation is becoming more critical.


From my perspective, the pain point mainly come from following 2 areas:


Firstly, hardware investment, most small and medium sized companies invested the first fixed asset decade ago, due to budget limitation or whatever marco& micro reasons, the first building and the machinery & equipment were invested to meet the target that get on hand orders to be produced, when more orders came the next year, a similar investment concept repeated.

(Yeah, there were a few companies who invested the first asset with a long-term view, part of them have grown into big companies, and the rest died due to whatever reasons.Today, we focus on those survived small and medium sized companies.)


At the earlier time, labor cost was much lower, most company owners chose to invest simple individual machine instead of highly automated & integrated machine, when the machinery is not as smart as expected, we rely on experienced operators to make the parts controllable. Now, labor cost is becoming higher and higher, some experienced operators are becoming too old to continue the operation, and young generations are more interested in AI instead of repeated simple operation. Recruitment difficulties and sustainable deliveries become more and more critical day by day.


Secondly, organization development, in the past decade, the owner was acting as a superman / superwoman, he / she controlled everything, decided everything; he / she drives employees instead of coaching them; uses people instead of developing them; takes credit instead of giving credit; he / she always says “I” instead of saying “We”; opportunities always prioritize family employees and relative employees. Under this working condition, I’m not surprised to see employees’ reaction is just to get assignment done as told, not to strive for active, cherish only the hope of avoiding mistakes.


During my work, I saw some company owners inviting fresh blood from outside with very high payment trying to change the situation, but not many succeeded.

Because of paying high, the hirer’s expectation to the hired is also very high.The hirer &the hiredtend to not consider risks that are out there, but conflicts are everywhere, working style, culture, education and life background, personality, etc. especially when hiring a senior manager from a MNC.The hirer’s perspective is a superman / superwoman who can make things happen and meet the expectation overnight based on what was discussed during the interview; the hired’s perspective is to meet the KPI and to get the salary paid. Looks like a marriage without love, divorce is no surprising result.


My recommendation about the hardware investment is lean mindset, better to ask following questions and get an answer with a 360 degree view by involving all stakeholders, before spending the money


1, who’s the customer? domestic and abroad

2, what’s customer’s need? domestic and abroad

3, what’s the government regulations? Local government and target market regions and countries

4, where are we? How far away from driving continuously the supply chain in the direction of delivering Cost, Parts, Service, Safety, Quality, Speed, Flexibility, Innovation and Sustainability to the specific market.

5, how can we meet the goal? Short term, middle term, long term


Once demand is clear, plan is available, do it with a project management concept.


I’d like to share a case I recently handled, and I hope it can be some help to both the companies and global sourcing staff. The product is not a complicated one with about 10 assembly process, the first time I visited the plant I saw huge waste in each process, zig-zag in house logistic, useless move back and forth between process, unbalanced machine working time vs human operating time, oddly designed fixtures further increased operation time, etc. it takes me quite some time to convince the company owner there is a better solution with limited investment to get the part produced. After a detail discussion together with cross functional team and the company owner, agreed all the improvement action with hand-made layout and fixture drawings, I asked “do you understand?” answered “Yes”, I asked “how long can you get the agreed jobs done?” answered “5 weeks”. I was asking for a regular update each Friday, and wrote down everything in a meeting minutes. at the end, all the machine and fixture modification finished, one week behind of schedule, not too bad. I visited the company again and I was really shocked when I see the machine operation panel was built 2-metre long, it’s more than an operators’ arms length, but, it was designed for one operator!


Now, I’m happy to tell you the modified production line saved 2 labors and increased output 4 times. The project team is carrying this experience to other products. Treat suppliers as business partners, give them a hand, we’ll benefit from a win-win solution.


About the organization development, I’d like to remind the company owners there is no superman / superwoman in the world, to boost an inspiring working condition and to drive team work spirit is the key solution.


I’d like to share another case. I am one of the board members of an executive MBA alumni association. Last year, I organized a peer consultancy to help an alumni owned company for their organization re-development. We gave the owner good enough time to give us a brief introduction about the company, he talked how he’d like to run the company? What’s the problem? What he had done to help his employees but result not as well as expected. Then, we raised one question to him “do you know what’s the employee’s expectation?” he was suddenly silent. Seems he never thought about this question, or, maybe he thought what he was doing is what his employees want. we invited 3 employee representatives to write down their expectation anonymously outside the conference,  secretly. After a heart deep inter-communication, the solution was available.


This company is global leadership in that niche market.



About Connie Wu






Connie Wu


Automotive Purchasing Professional


LinkedIn Profile

I interviewed Evren Ozkaya who discussed Digital Factory and Digital Supply Chain.







Can you first provide a brief background of yourself?


Hello, Dustin. Thank you, and first of all, I appreciate the invitation for being here. A little bit about myself... My name is Evren Ozkaya. I'm the founder and CEO of Supply Chain Wizard. We are a management and technology consulting firm headquartered in New Jersey. We focus primarily in pharmaceutical industry and serving some of the largest manufacturers in pharmaceutical industry, the branded or generic manufacturers, around the world. And we focus on primarily in supply chain security and compliance projects as well as supply chain transformation and performance improvement projects.


Prior to Supply Chain Wizard, I was an executive in a pharmaceutical manufacturer in the supply chain practice. And prior to the pharma industry, I was with McKinsey & Company as a consultant in their supply chain management practice, serving clients involved in vital industries, including healthcare, medical devices, logistics, consumer packaged goods, and a little bit of private equity.


So in Supply Chain Wizard, what we do is we help clients understand their end-to-end supply chain operations, whether it is going deeper into their manufacturing and packaging operations or their warehousing operations or their operation between trading partners like suppliers and customers. It includes a holistic view of understanding the supply chain before we can help them with their supply chain management problems or opportunities.


We are headquartered in New Jersey in Princeton. We serve pretty much all the countries in the world, wherever our clients are. We operate mainly out of five countries — the United States, Germany, Netherlands, Turkey, and India.


In our services, we do it in two ways. One, of course, bringing domain expertise and supply chain management consulting expertise.And the other way we help our clients is bringing targeted software to specifically tackle their supply-chain-management challenges. Our typical clients include head of supply chain, head of operation or IT, or head of manufacturing and packaging in different parts of the world.


Can you talk about what is the Digital Factory and Digital Supply Chain? And why are they important?


Before I begin answering this question, I want to give you a little bit of context specific from the pharmaceutical industry. Pharma industry is going through a major, major transformation in the recent years driven by regulatory pressures and legislations introduced by different countries in the form of track and trace or supply chain traceability or, in other words, serialization.


So what this is is for the first time in pharma industry, the traceability of the supply chain, the products in the supply chain will be done, not at the batch level, but at the individual unit level, the saleable unit level, which means that from a vertical silo mode of operation, companies can transform themselves into a more horizontal flow where they have the ability to track any single product from the origin of the product — where are the manufacturer/manufacturers, which nodes in the supply chain it flows through, and where it ends up in the market.


So what is the big challenge here? The big challenge is the speed of change enforced by the regulations. So right now, there are more than 40 countries in the world with the serialization track and trace regulation, and the required timelines are all ranging from two to three years. So they the year 2020, more than 90% of the pharma supply chain in the world would be coming under the serialization and track and trace regulation. So the challenge is the speed of change. The challenge is the digitization of the supply chain and the amount of data that is being created and the lack of experience and expertise in handling this major change.


So, for the first time in pharma, we will be getting computers in some of the sides and factory shop floors. For the first time in pharma, the electronic connectivity between trading partners are becoming mandatory. So still, many of the pharmaceutical trading partners are all operating on emails and phone calls and, believe me or not, in faxes in terms of communication and exchanging order data and shipment data.


So now the companies are not ready for this change. A lot of investments are being made. And because of this major challenge, it is also opening up a major opportunity, which is a digital supply chain.


So the project we are helping the clients implement, primarily, is implementing track and trace infrastructure, which is consisting of equipment to help put unique serial numbers on every single unit and the software that is used to generate these serial numbers, maintain those serial number status, and then trace those serial numbers along the supply chain.


So when I say digital supply chain, it's the ability to look at the pharma supply chain, or any supply chain in any other industry, from a digital lens. The data is being the primary currency and how to use that data, how to transform manual operations into more digital operations with the help of the data. Because there will be a lot of data being introduced into the supply chain in the many years to come.


So when it comes to digital factory, the story is a little bit deeper in the shop floor operation. I just said earlier that for the first time ever, some of the factories will be getting computer systems on their shop floors. So currently, many of the medium and small-sized companies operate on a manual or machinery that is not communicating with any other machinery or any other system. Right now we have the ability to introduce computer systems, digitization and the ability to introduce sensors to the lines and packaging and manufacturing lines and collect the data from the shop floor and connect it with the overall supply chain flow.


So with the concept of digital factory and digital supply chain, companies would be able to automate some of their processes. They would be able to harness new data that wasn't previously there, and use that data in creating a trend analysis or insight analysis or, in some cases, predictive analysis to understand some [inaudible 00:04:33] for the future of their operations and use this to their advantage in becoming a digitized supply, a digitized factory, a digitized operation.


So, why it is important...why these concepts are important. First of all, the current supply chains are highly complex. Their efficiency levels are low, so they're highly inefficient and mostly depend on manual processes. So the future of the supply chain is, on the other hand, would be based on digital principles and data. It would be simplified and streamlined with the help of data and algorithms that can manipulate and use the data. The future of the supply chain would be automated, a lot more automated than today, and it would be highly efficient.


So take a look at the Uber supply chain, for example. It's the system of bringing the supply, which is the drivers, to the demand, which is the passengers and connecting them electronically through the use of cloud applications and knowing exactly where each supply point and demand point is and matching them together and simplifying the process. So like this Uber transformation Uber brought into the transportation industry, the track and trace and serialization is bringing a major transformation into the pharma industry.


So the approach is from a platform we create called SCM 3D, Supply Chain Management 3D, and there are three pillars of the transformation. Firstly is the data. That's where we're collecting more electronically, more automated. The second pillar is the dashboard, basically understanding data, creating insights, creating trends and potentially predictive analytics out of the data to get more insight into the operations. And thirdly is the decisions, meaning using those insights, using those data points, and making smart decisions about your day-to-day operations.


So using these three pillars — data, dashboard, and decisions — companies can be able to make much better decisions. They could be able to have a lot more visibility. The opportunities would be more visible. The challenges would be more visible, and the best of all, they would have the ability to pinpoint specific opportunity of a specific issue and focus to solve it.


So because of these reasons, the digital factory and the digital supply chains are extremely important concepts for the specific to pharma industry because of the major transformation I just explained, but also in many other industries.


How are the Digital Supply Chain and Digital Factory concepts put into practice effectively? Have you seen good results which you can share?


Let me give you an example from the digital factory. In one of our clients in New York, a major pharmaceutical manufacturer, we have been implementing an equipment, a brand new equipment, to make this serialization a reality. But after the implementation of the serialization system and equipment, we observed during the testing a significant drop in the efficiency, and the line speed slowed down. So we wanted to understand what the implication is. Obviously, the client wasn't happy with the result, and we want to understand how we can make it better, how we can improve. So we ask a very simple question, "What is the current baseline efficiency?" And unfortunately, we couldn't have the data to calculate the current baseline efficiency, let alone predict what might be the future efficiency. What we were sure was that there is going to be a significant loss in the packaging line, the manufacturing line efficiency.


We created a joint initiative in this case with the client, and we said, "We need a system, a digital way of capturing the activity data at the line," which is basically the times where the operation is running, producing, the times when it is down due to either clean up or set up or some sort of a failure in a particular machine.And if it is a failure, then which machine is failing? Why am I stopping the packaging operation?


So all these reasons were basically captured to create a proof of concept solution, a software solution in the cloud, which we call OEE Tracker. So OEE stands for Overall Equipment Effectiveness. It's a measure of the efficiency of the line, and it considers the time aspect of the efficiency, the productivity aspect of efficiency and the quality aspect of the efficiency.


Once we created the solution and combined the solution with the set of sensors, the internet of things, IoT sensors, that can count and number of products produced on the line digitally, capture this data, post it on the cloud, bring it back to the application, and therefore combining the inputs we receive from the operators as to when they are running and when they are down, and the reason for the stoppages, together with the line speed data and the count data from the sensors, as well as the vibration sensor data that tells us whether a particular machine is working or not, we could create a consolidated database of activities that enabled us to track the line operations 7/24, live. Whenever there was a shift, we were capturing all the activities. Whenever it was down or idle, we were capturing it as well.


After about two to three months with this pilot project, we took a step back. We analyzed the data we gathered, and we presented to the upper management. Basically the site leadership was seeing the data for the first time. And they were totally amazed with their own data that they were previously not capturing or capturing bits and pieces of it on set of spreadsheets or paper. So for the first time, everything came together in a digital platform, and the client could be able to see their own operations 7/24, end to end. And with that, we uncovered a lot of new insights such as the average time of the stoppages, the certain variability of the cleanup of the operation, the performance of particular products versus the others, which machine was failing more frequently than the others.


This whole effort alone, just tracking the operations digitally, helped us put 10 to 15% more productivity on the line because of creating awareness. Some of the operators or the supervisors were more motivated because they know they're being tracked, to better perform. They also contributed improvement initiatives that they have taken themselves — nothing formal — and this alone improved the line efficiency by 10 to 15% within a number of months.


Now the next stage of the operation of our project, we went into deeper advanced analytics. So what can we do with the data? How can we better you that data and give you better insights, such as predictive analytics? The predictive analytics, one example is, when is the next down time? And, which machine is more likely to fail, so that you can position your maintenance crew next to it. Or the advanced analytics could be in the form of scheduling. So, how can I take the work orders that are required to be produced this month, and which line I should produce by when? What product is running more efficiently on which line? All this data which previously didn't exist is now in a single system, and the systems are getting smarter by learning from the data continuously, so there is a little bit of a machine-learning element to it, so we can make better and better decisions over time.


This concept where we started took us one quarter to bring it up and running as a proof of concept, another quarter, a couple of months, to basically prove it on multiple lines, and at the end of the second quarter, the client was convinced that we need to implement this entire line in the entire factory. So now, we are operating around nine or ten different production lines in this particular site, which we call digital factories, the foundation of our digital factory, and it's very interesting. The client is very happy. They have the visibility that they never had before. They can see live operations and which lines are idle, which lines are running. They can calculate their capacity instantaneously. They can run all sorts of reports out of the system. So this was their first step into the world of digital factory, and now we are taking them through a very long journey of improvements, insights, and better operations because of this concept. So we are both very happy that we are learning with our client, and the client is very happy because they're getting real value out of the digital factory initiative and the transformation that they are running.


Thank you, Dustin, and kudos to you for providing a platform to the supply chain experts of the world on critical topics of our field. Thank you.



About Evren Ozkaya







Evren Ozkaya


Founder and CEO at Supply Chain Wizard, LLC

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