Connected & Ready

Supply Chain pain points and progress, with Mark Weimann

Episode Summary

Back in October 2020, when we last spoke with Mark Weimann, Technical Specialist for Microsoft Dynamics 365, the impact of COVID-19 was surging, yet the mounting supply-chain issues began to stabilize. Today, more than a year later, supply-chain issues have persisted and even escalated to the point where they have impacted consumer behavior and become a frequent story on mainstream news programs around the world. In this episode of Connected & Ready, we revisit the topic with Mark and find out what we’ve learned since that previous episode, and what businesses can do to move forward and remain productive in the face of an evolving pandemic. Learn how Microsoft Dynamics 365 Supply Chain Management is helping businesses build agile and resilient supply chains. Request a live demo today: https://aka.ms/AA8l720 Thank you for listening to Connected & Ready! Do you have ideas of how we can improve the show? Want to recommend a guest for us to interview? We value your partnership and participation. Please drop us a note at connectedandready@microsoft.com. We would love to hear from you.

Episode Notes

Mark Weimann, Microsoft Dynamics 365 Supply Chain Management senior technical specialist, returns to talk with host Gemma Milne about what’s changed since their October 2020 conversation, and what hasn’t. Topics include the impact of supply chain disruptions on consumer behavior, new technologies supply chain leaders should know about, the connection between resilience and sustainability, and where Microsoft is focusing its efforts in building better supply chain solutions.

Topics of discussion

 

About Mark Weimann

As senior technical specialist for Dynamics 365 Supply Chain Management, Mark helps enable digital transformation for organizations around the world. For him, a great day at work includes the opportunity to sit down and discuss how Microsoft technology can enable Businesses to transform and gain a competitive advantage in the digital age. 

Learn more about Mark Weimann

https://www.linkedin.com/in/mark-weimann/

 

Read Mark's latest white paper on Supply Chain Management

https://aka.ms/7PSCM

 

Sponsor link

Learn how Microsoft Dynamics 365 Supply Chain Management is helping businesses build agile and resilient supply chains. Request a live demo today: 

https://aka.ms/AA8l720

 

Contact us

Email: connectedandready@microsoft.com

 

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Episode Transcription

Gemma [00:00:05] Hello and welcome. You're listening to Connected and Ready, an ongoing conversation about innovation, resilience and our capacity to succeed, brought to you by Microsoft. I'm Gemma Milne. I'm a technology journalist and author, and I'm going to be exploring trends around how companies are adapting to a disrupted world and preparing for tomorrow. We're going to speak to the innovators who are bringing products, operations and people together in new ways. In today's episode, I'm chatting for the second time with Marc Weimann, Technical Specialist for Dynamics 365 for finance and operations, to talk all about the origins and current state of supply chain disruption. We touch on the impact consumer behavior has had on suppliers and how business leaders can continue building resilient supply chains amid the evolving COVID 19 pandemic. We last spoke with Mark in October 2020, when the impact of COVID 19 was surging and mounting supply chain issues began to stabilize. In that earlier conversation, Mark reflected on the first six months of the pandemic, and shared early learnings for that period. He offered strategic and practical guidance on how organizations could remain resilient in the face of many of the unknowns that were to follow since that time. In today's conversation, we'll pick back up on some of those themes and discuss the lessons learned since then and explore latest approaches that companies can apply today and into the new year.

Gemma [00:01:26] Mark, thank you so much for coming and joining us again on the show. Some of our listeners, I'm sure, already know who you are from listening to the previous episode, but to remind everybody and for anyone who's new, it would be great to get a bit of a reintroduction. So tell us a little bit about your role, your experience, and your journey at Microsoft. 

Mark [00:01:43] Sure, and thank you for having me, Gemma. My role in Microsoft is what is known as a technical specialist, so I look after the products in the Ddynamics realm specifically related to the supply chain. I've been working with the Ddynamics applications for about 20 odd years, and my background before that is I actually held roles in the supply chain, starting off as a production planner, working my way up to running fairly large organizations, supply chains for them. 

Gemma [00:02:13] Now seems like a sort of running joke, this idea, the phrase or the term supply chain has never been so popular as it has over the last two years with sort of more mainstream audiences or people that are not normally thinking about things like supply chain. And obviously, the last time we spoke was October 2020, which was quite a long time ago. But at the same time, still lots of things happening when it comes to thinking about supply chain. So I wonder if you could tell us a little bit: has the supply chain dynamics changed for the better or the worse since then? And tell us a little bit about the factors responsible for that change. 

Mark [00:02:46] Sure. I think you're 100 percent right, Gemma. The supply chain has become more part of the mainstream conversation because it has become more visible and that's to everybody, not just practitioners of the supply chain. In the last year and a bit since we spoke, if anything, the supply chain has become more visible because the problems haven't gone away. In fact, we've experienced some significant additional problems that weren't being experienced the last time. The last time it was really the panic buying sparked by COVID, and the impact that that had had on the supply chain. But in the interim, we've had some fairly significant other shocks to the supply chain, particularly with the Evergreen ship that blocked the Suez Canal. We've had the truck driver shortage in the UK. We've had food and other shortages in the United States. In the pas it was about sales and how can we sell more? But lately the conversations have been how can we make our supply chain more resilient? What can we do to prevent these things happening and how can technology help us stabilize the supply chain? 

Gemma [00:03:56] Tell us then a little bit about some of the more recent things that are happening. I mean, what about the onset of new variants, such as Omicron? 

Mark [00:04:04] You know, Omicron's now out, and now there's been a travel shutdown in many countries around the world. People are obviously upset about all of that. But for the supply chain, what it means is that there's a workforce and there's a factor of supply that now has been impacted and the outcome is that we're seeing restrictions in the supply chain. Simple example: the semiconductor chip shortage that has been seen worldwide largely started because of shutdowns in the industry as a result of COVID. So of course, they couldn't produce. On top of that, you get the flip side of demand where everybody who was working from home suddenly wanted a new computer, they needed more screens, more compute power at home, new devices, and so there was this immense surge in demand, together with a shortfall in supply that is now impacting everything. Latest is the car manufacturers because they need those semiconductors for cars because we're so reliant on them. So there's this ripple effect that goes out from one event. 

Gemma [00:05:09] Do you also see perhaps consumer behavior changing because they're aware of the issues with the supply chain and then that having further effects too? I mean, let's dive in a little bit more to that point about consumer behavior. 

Mark [00:05:21] So consumer behavior has changed to a degree. People are going, OK, the supply chain can cope. Where we were panic buying toilet paper and pasta and stuff like that, we're not seeing that much happening anymore because people have faith in the supply chain and there's a resilience in those basic components. But it's where we're not prepared that consumer behavior still goes - quick, is something going to go short? Panic. Buy. 

Gemma [00:05:47] So then building on that point about, I guess, learning, I'm curious about people, you know, supply chain professionals, businesses that heavily rely on supply chain, obviously ones that have physical goods. Are we still in a phase of having to react to what's been going on? It's just been crisis after crisis, and we've not really had time to actually rebuild and make our supply chains resilient, make business processes right. Or do you feel that there has been a level of learning, a level of shift, that means with each new thing that's happening, we're actually getting a bit better? 

Mark [00:06:20] There is a huge amount of learning going on and a significant amount of time going into learning from what has happened. We're seeing whole branches of new studies happen around how do we develop the supply chain, how do we make it more resilient to these shocks, and how can we safeguard ourselves against the shocks? The shocks will continue to happen, right? It doesn't matter whether it's COVID, whether it's a ship blocking the Suez Canal, shocks will happen in the supply chain. It is about what we do to either predict them, safeguard against them, or protect the supply chain so that we don't have these huge repercussive effects that happen when things go wrong. 

Gemma [00:07:02] But what is it that needs to happen in order to do that? I mean, is that individual businesses all having to kind of rethink their own strategy? Is it something that has to happen at a more sort of central level, although of course, this is a global system. What do you think needs to happen to allow for this much more resilient global supply chain? So it's not just one business going, you know, we're going to invest in this and make it make what we do great and then having to rely on someone else that hasn't put that investment in. 

Mark [00:07:29] You've gotten to the nub of the problem there Gemma. The reality is that an individual business, if they just look at themselves, is not going to get the picture. They're not going to be able to fix the supply chain. It has to go up and down. One of the things that we're investing heavily in is the concept of a supply chain control tower with what we call an N plus one effect. So from a visibility perspective, if I'm a single organization and I just look at my suppliers and my customers, I'm only getting a part of the picture. But the reality is my suppliers are impacted by their suppliers and their suppliers are impacted by their suppliers. So the more visibility I can gain upstream, the better I'm able to prepare for and predict what is coming downstream and similarly with my customers. So the concept of inventory visibility, the last time I talked about three Vs of supply chain visibility, velocity and variability, and one of the key things is visibility. So if I in a supply chain can see what is happening to my supplier, it gives me the ability to collaborate. And that's the second thing that we're seeing in the supply chain: a far higher propensity for suppliers to collaborate in the supply chain because again, the bullwhip effect: I order multiples of because it creates efficiency upstream. But if I can collaborate with other suppliers, I can reduce that bullwhip effect. And then we start to stabilize the path of the supply chain. 

Gemma [00:09:05] So let's then talk about what that means for business leaders, people who are listening to what we're talking about here and thinking, OK, I feel like I'm in a bit of a catch 22 here. I can do lots of work, but it is difficult because of this reliance on everything else. And you're talking about this just kind of 3-V strategy. What does that look like in practice when it comes to things they should be doing right now to ensure that they can either continue having a resilient supply chain or start having one if they don't currently? 

Mark [00:09:33] Yeah. So practical things that they can be doing at the moment. One of the things, as I said, is increased supply collaboration. We're seeing people start to talk more to their suppliers and their suppliers, talk to their suppliers. So we've done a lot of work with Daimler-Benz trucks in the United States and on the area of inventory visibility, where they are not just looking at their suppliers, but they're looking at getting that data from their suppliers’ suppliers. So it's this upstream effect so it gives them increased visibility and predictability, so they're able to react sooner, they'll be able to react smarter to what happens in the supply chain. Part of that is enabled because of the amount of data and the fact that we're able to process it far quicker than we've ever been able to. If we went back 10 years, we simply did not have the compute power to deal with that upstream. So business leaders looking at collaboration, they're also looking at contingent distribution routes instead of sending everything through the Suez Canal, why don't we look at how we can buffer that by sending some of it through the Suez Canal, but maybe some around the Cape of Good Hope? That way we buffer against those supply chain shocks. So contingent distribution routes, balancing flow so that we're not going: here's one big order and everything relies on that one big order arriving in time because when it doesn't as it often doesn't, then everything turns bad. So how do we balance that flow from our suppliers? So we're seeing all of these, and one of the big things that we're seeing is the use of artificial intelligence and big data and data science to start driving machine learning models that better predict outcomes. Not just in demand, but upstream in supply. Up to now, there's been a lot of focus in planning demand. What can I expect to sell? But the model is turned around and we're seeing a lot of effort now in how do we predict supply? 

Gemma [00:11:40] I wonder if I can go a little bit deeper into this question around what to do. What if you're a smaller business that you know in some sense is kind of caught in between two sides of a supply chain. Maybe you don't have the ability to do that sort of more collaborative approach to getting that information. Also thinking about, you know, using AI and data, is that expensive for smaller businesses? I wonder if you could talk a little bit about how what these strategies are regardless of business size? 

Mark [00:12:08] Yeah, and the strategy does apply regardless of business size. We always used to talk about the elephant in the room, the person who's the biggest has the power, but we're seeing that a lot of that is changing because if we think about it, a lot of products come from the same manufacturer, regardless of where it retails. There are few manufacturers for most products. And so if a number of our smaller customers get together to talk to a single manufacturer, they find that there is an efficiency in supply by grouping that together instead of ordering one container of a thousand units of a product, perhaps that can share that 1000 units of a product among three of them, and that then makes it more efficient, allows the manufacturer to do what they do, but each of the small customers still get the benefit of managing those volumes. Coming to the second part of the question around the cost of AI. One of the things that Microsoft have really put a big focus on is democratizing AI. So what we're doing is we're creating the toolkit, we're creating the platform for AI, with the tooling that people don't have to build. So what it is, it's about bringing your data and bringing the model on how you predict and even those models - what we're finding now is our partners are developing those models and making them commercially available. So for a small organization, there's a tool that they can deploy without a huge cost because really what you're doing is you running it and you're paying for the run of that tool and then you're bringing the data and a model. And so it becomes a far more acceptable equation to a small organization than it used to be years past when you had to provide the whole lot yourself. 

AD [00:13:53] Microsoft Dynamics 365 Supply Chain Management helps businesses build agile, connected, and resilient supply chains to effectively meet changing customer demand and ensure business continuity during times of disruption. Using predictive insights powered by AI and IoT, Dynamics 365 helps streamline operations to maximize efficiency, product quality, and profitability. Request a live demo today by following the link in the episode description.   

Gemma [00:14:29] What are some of the emerging capabilities that business leaders can unlock and what does that mean, then, for consumers? I wonder if you could get some examples of some of these tools or these models and so on and so forth that have been deployed in a successful way to get that resilient supply chain? 

Mark [00:14:45] Sure, there are a number of things from the baseline platform technology model. So the advent of the cloud as an example. And now the cloud is now not new, it's been around for a long time, but democratizing the cloud and making it available globally certainly gives you that big data scale because let's face it - supply chain is about big data. If it's 100 products, I could probably manage that in my head, but make it a thousand products, each of which that have 10 or 15 components times the scale, you're suddenly getting into the world of big data, so you need a platform to deal with that. So the Azure Cloud does it, it's got to also do it securely because we all know that cyber security is an issue, and it's got to make it pragmatic for small organizations as well as large. The second thing is this idea of pre-built industry ready A.I. tools that can support the supply chain. So procurement predictability, what if calculations and machine learning services? These are all things that one can go to in our case, the Azure Cloud, and you can start spending up to date. It's not that you have to put in a massive amount of time or investment to start getting the tools. And then the idea of the supply chain control tower. So again, the piece that connects the pieces is really where the supply chain control tower comes in. It enables us to get that global visibility of data as far as it is visible for an organization. If you don't have a collaborative relationship with the supplier, then yes, it does become a challenge, but it is encouraging collaborative relationships and it's creating real benefit by going, now I can see not just the immediate, but I can see upstream, downstream, and I can start to plan around that. The wine industry actually has a really good example of that. In the wine industry, there are certain wines where they are supply constrained, they only grow so much grape per year. And so therefore they have an allocation model. Each supplier, then or each customer then gets an allocation of that product based on their prediction of the yield for the year. And as the grapes start growing, they start doing more finite predictions to the point where by the time they're ready to harvest, they can almost predict to the case what that outcome is going to be for that particular product, for that vintage, and they can then say to their customers, well you're going to get 300 cases, you're going to get 200 cases. And this is in the case of some really small wineries. So the model works, but it relies on collaboration. 

Gemma [00:17:31] I wonder if you have an interesting example, perhaps it's linked to how this technology has been deployed or linked to some of the current crises that we've had over the past week while whether it's to do with COVID or to do with the canal, that really brings to life what it means to have to think through supply chain, how to manage it in a way that's going to work for our current times. 

Mark [00:17:52] Look, there are many examples of that. So when I start thinking about some of our customers because I always bring it back to customers and what our customers are doing, we're working with organizations such as Bell Power. They're a mid-market producer, they don't retail to end customers. You're not going to buy their products in a store, but they sit in the middle of the supply chain. And so what they're doing is they're really tying together both of those components. And for them, it's really about how do they increase that agility? How do they make themselves a lot more agile? How do you predict what that demand is going to be for a once a year event that depends on the season? Is it going to be warm weather, cool weather? Are people going to be stuck at home for COVID? It's about predicting all of those things. So for them in the power business, it's really going - it's not just the supply chain, but there's a relationship to the weather. There's a relationship to population growth. There's a relationship to people stuck at home in a lockdown. So how do I tie these pieces together and get them all working? So really, really interesting examples of things that people actually are having to think through in a practical sense at the moment. 

Gemma [00:19:07] I always think that the interesting one with power to when you are thinking about lockdown, you know, before you could predict spikes, you know, say, in the UK of everybody making their tea in the morning when they got up, you know, and to commute with their little thermos flask. But of course, now everybody's staying at home, they're making their teas throughout the day, or they're maybe not making it at 7 a.m. anymore, maybe they're making it at 8. And so suddenly the supply and demand of power has to completely shift, and it's a really difficult one to predict. 

Mark [00:19:32] Correct and think about the distribution of power. Where distribution of power was focused at central business districts and cities and factories because that's where people were would accumulate. Now you're having to distribute power out to homes because that's where people are working. The distribution model changed completely as well, and to be honest, I think realistically we reacted really well to the supply chain and COVID. Yes, we ran out of product. Yes, we experienced issues. But overall, the resilience of humankind overcame a lot of that. But it brought out a lot of lessons that we're still trying to absorb and we think we can resolve because we have the ability to better understand the data and better predict the data. 

Gemma [00:20:17] So I want to talk a little bit about environmentalism and making sure that supply chains are environmentally friendly too. I wonder when we're thinking about resilient supply chains and what are the lessons that we've learned over the past two years, how is that also impacting how we think about making sure supply chains are sustainable, making sure that they work for the future that we go forward into whatever that looks like? 

Mark [00:20:40] Absolutely. That's another conversation that is front and center at the moment, which is the sustainable supply chain. How do we address the need for integrating environmental choices in our supply chain strategies and operations? When we think about how do we get goods, how do we use the logistics from point A to point B? What is the most environmentally friendly option? What is the most sustainable option to do that? I was reading a very interesting article about the hybrid move in shipping towards using sale assist. Now we're going back to the seventeen eighteen hundreds 1700-1800s with sail powered ships, but with modern technology, it is really looking at how do we create a more sustainable method of bulk transporting items around solar power on trains, all sorts of options over there. And I think the modern supply chain professional has a very high impact in the area of sustainability because we really are driving a lot of the logistics. 

Gemma [00:21:46] Would you say that there's been anything with the pandemic that could be applied to then going, OK, how do we actually make our supply chains more green, more sustainable, future ready? 

Mark [00:21:56] There has been, and some of that comes back to the bullwhip effect, which we talked about in the previous podcast. And that is between the consumer signal and the end producer, the raw material producer. The signal increases in amplitude for a small deviation. So a customer buys a unit of one. The retailer has to buy a pack of 100. The manufacturer has to make a pack of 1000. And so it goes upstream. From a green perspective, that's not very sustainable because you're effectively building waste into the supply chain. By managing that bullwhip effect, by trying to leverage multiple organizations to procure and remove those constraints of minimum supply, bring down the amplitude of the bullwhip. You then become more green because you're only shipping the product you need. An example from a customer I was working with is they would order a carton of 1000 from a supplier, and the supply would wait until all 1000 were ready. And then they would ship them. And they worked out together one day over a conversation that we don't need a thousand at a time. We're only really selling about 25 of these a week, so we'll send you the order for a thousand. but why didn't you just send us 25 a week? They saved in transport, storage, they didn't have to throw away as much product at the end of the day. There were numerous repercussions up the chain because of a simple decision that said, hang on, we don't need to get all of these at once. So green very much comes into that,  how do we get the efficiency of ordering and the efficiency of production together so that we minimize the impact on our logistics channels? 

Gemma [00:23:44] What about consumerism and this kind of expectation of on demand, particularly you know, companies like Amazon providing same day delivery in some places or next day delivery? This kind of, I guess, expectation by customers to be able to get what they want, something personalized, immediately. Are there shifts needed there as well to ensure that supply chains are not only green, sustainable and resilient, but also, again, future ready? 

Mark [00:24:13] Absolutely. I think the rise of consumerism has driven the impact of the shock onto the supply chain, but it also has an impact on the sustainability aspect. If the idea that I-want-one-of-these- and-I-want-it-today means that one, it's got a supply chain impact, but secondly, someone has to deliver that today. Instead of waiting a few days when we could make that delivery more efficient and deliver to multiple people, you're going to deliver to me today, then tomorrow, you're going to deliver to my neighbor, the next day you're going to deliver to the person next door to them. And so three trips instead of one. So yes, consumerism has a lot to blame for this. But I think as we move forward, it's changing the model of the way that we start to think about supply. Back in the late 80s, there was the idea put forward that the ultimate batch quantity of anything is one. Because that's what people want. But one is not the most efficient batch quantity to move around in a supply chain. So therefore, we go, how do we balance the consumer demand for something with the constraints of the supply chain so that we get to an optimum quantity? And organizations like Amazon are very good at very advanced, very quick logistics. It is about how do we balance that in a supply chain, either through hub and route, either through new distribution models. A distribution model that I've heard put on the table is the it's almost the social network distribution model that instead of me having to get something or have it delivered to me, I've got a friend who's working in town. They could collect something for me because they live next door. So using a social networked supply chain might mean that we can address the needs of consumerism, but also balance the demands of the supply chain and sustainability. 

Gemma [00:26:10] Let's talk one final thing talking about future facing and about what's on the horizon for Microsoft. How is Microsoft in its solutions, inspiring organizations to achieve more specifically, obviously with this focus on supply chains? 

Mark [00:26:23] There's a number of aspects that we're looking at. We're firstly looking at workforce transformation, right? How do we address the needs of the workforce in this post COVID 19, please be post-COVID-19, world for remote operation, automation, worker productivity, and safety. So in the supply chain, we're looking specifically at things like that. So remote operation, how do we make it easier for people to operate remotely through things like HoloLens and guides and applications automation, taking away the transactional stuff that people don't want to do and helping them to do the higher value work, so we're really looking at those aspects. In the supply chain management space specific, we're looking at next generation native Microsoft Solutions around visibility, planning, sourcing, logistics and distribution. So this concept of the control tower, digital twins in production as well as distribution. We are definitely looking at the sustainable supply chain as a goal, and we're addressing that through our sustainability cloud. So really providing the data, providing the scorecards, the metrics, the AI to drive sustainable initiatives. We ourselves have got significant investment in the supply chain and in reducing our own footprint from an environmental impact perspective. And then the other areas are the trusted supply chain security compliance. So keeping critical information safe, track and trace risk mitigation strategies with secure data sharing and collaboration. It's important if we are to achieve goals of supply chain collaboration that we have to have security of data. And so we're really focused on that. And then in supply chain innovation, we're accelerating the adoption of what people call disruptive technologies. So IOT, AI, blockchain for traceability, we're really accelerating adoption because those technologies have been around for a few years now. But how do we make them practical? So those five are really the pillars which we're looking at to drive supply chain innovation. 

Gemma [00:28:41] Amazing, Mark. Thank you so much for taking us through so many different elements of what's going on in the supply chain, everything from the kind of big global events right into a bit more detail around what managers, what leaders really should be thinking about in terms of strategy and of course, some of the technologies they consider being a helping hand in this in this bid to create resilient supply chains moving forward. So, Mark, thank you for joining us again on the show. 

Mark [00:29:15] Thank you, Gemma. It's been a pleasure. 

Gemma [00:29:10] That's it for this week, thank you so much for tuning in. You can find out more about Mark's work, and indeed some of the broader themes we discussed today in the show notes. If you enjoyed the episode, please do take a few moments to rate and review the podcast, it really helps other people discover the show. And don't forget to subscribe, and tune in next time to continue our conversation about innovation, resilience and our capacity to succeed. 

AD [00:29:38] Learn how Microsoft Dynamics 365 Supply Chain Management is helping businesses build agile and resilient supply chains. Request a live demo today by following the link in the episode description.