When COVID-19 hit, supply chains everywhere experienced massive disruption. Some months later, the situation has somewhat stabilized. Reflecting on this extraordinary time can already provide us with lessons on how best to adjust supply chains for efficiency, agility, and resilience. On this episode of Connected & Ready, Mark Weimann, senior technical specialist for Microsoft Dynamics 365, joins Gemma for an in-depth discussion on what it takes—both practically and strategically—to build a resilient supply chain. 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
Host Gemma Milne is joined by Microsoft Dynamics 365 Supply Chain Management senior technical specialist Mark Weimann. They discuss the impact of COVID-19 on supply chains, the importance of resilience, and the technologies that are helping companies increase supply chain visibility to gain a better understanding of their data.
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
Read Mark's latest white paper on Supply Chain Management
Topics of discussion
Learn how Microsoft Dynamics 365 Supply Chain Management can help your business build agile, connected, and resilient supply chains to effectively meet changing customer demand and ensure business continuity during times of disruption. Request a live demo today.
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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.
[00:00:13] 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 to Mark Weimann, senior technical specialist for Dynamics365 Supply Chain, about building resiliency into supply chains. We take a closer look at what exactly happens with supply chains earlier this year, when stores struggled to keep up with increased demand, what building a resilient supply chain looks like and why that matters, and the tools and technologies that enable this resiliency as businesses move into their future.
[00:00:58] Mark, thank you so much for joining us on the podcast today. I wonder if you could start by giving us a little bit of an introduction to yourself.
Mark [00:01:04] Sure. So, my name's Mark Weimann. I'm a senior technical specialist at Microsoft. I've, for the last 20 years, I've been working as a consultant around finance, commerce, and supply chain enabling digital transformation for organizations around the world. So, in the manufacturing wholesale distribution space and in industries ranging from retail to mining. My background originally before I did that is I actually started in the supply chain. I started as a ground floor production planner and worked my way up the ranks to run the supply chains of some pretty large organizations.
[00:01:43] And I studied industrial engineering and commerce and also ended up getting a CPA certificate in production and inventory management for my sins.
Gemma [00:01:55] Amazing. Sounds like you've had quite the career, Mark. So, you mentioned supply chain. I don't think I've ever spoke about supply chain as much as I have in 2020. It feels like the term in the industry has certainly come to the front of everyone's minds.
[00:02:10] And of course, a lot of that is due to what happened earlier in the year when some store shelves were completely empty and other businesses were having the opposite impact where they couldn't fulfill. So, I want to know what happened? Did the supply chain break, as some people were saying, or was something else going on? Walk us through what was happening.
Mark [00:02:29] Well, you're 100 percent right. The supply chain has never jumped into focus as much as it has done earlier this year. Realistically, what had happened is that with the COVID-19 pandemic and really people's fear about what was going to happen when they went into lockdown, they bought more than they needed. The supply chains were there, as they had been for years and years and years. And really what happened was that products just ran out. The supply chains couldn't keep up with the demand and we saw stores getting stripped. Across Australia, we've got something like 3700 stores across the major players in the grocery market, and they were all simultaneously stripped of the same products. I think what was really surprising was that it wasn't products that are deemed fashionable or high value. It was very basic products.
Gemma [00:03:32] Yeah, I mean, it was all the photos of the toilet roll aisle completely empty that I think just captured everybody's attention. And flour was, as well. Everyone wanting to learn how to bake sourdough.
Mark [00:03:43] Flour. Pasta. Yeah. Toilet paper. Just everything. Everything stripped off the shelves.
[00:03:49] So tell us a little bit about what's happening now. Have their supply chains bounced back after all this time? Has demand returned to normal? Give us a little bit of a flavor for that.
Mark [00:03:58] Look, the reality is that if we look at the supermarket shelves, products have returned to the shelves. So, they have refilled. But there's a fundamental way that we look at the supply chain that describes what happened in that. And it makes sense when you think about it slightly differently. So, what I tend to do is I think of the supply chain as a supply pipeline. If you think about a chain, a chain is hopefully an unbreakable object. But when it breaks, everything stops. But a pipeline has to be filled, a pipeline filled with product. And if you leave the tap running, eventually the source of that pipeline is going to run dry. And that's really what happened. If you think about the supply of those products, the pasta and the flour and the toilet paper that are in a pipeline that runs from a store to a in the supermarkets case, a distribution center from the distribution center to the manufacturer and backwards store the raw material supplies. So, if you drain all of the shelves simultaneously, there's nothing left in the pipe. Once you've emptied what is in the pipe, it runs dry. So, when you think about it that way, you get an understanding of what really happened. Simultaneously, we took everything out. The reservoirs upstream couldn't cope. And the pipes ran dry. And it took a while for those pipes to refill. So instead of it just being an overnight miracle, the shelves were all full again and we're all happy, it took a while. The distribution centers had to be filled. The manufacturers had to go to extra shifts further upstream from the manufacturers. The raw materials suppliers had to find more raw materials, and that length of time flowed all the way through the supply chain until we started to see products reappear on shelves and shelves gradually full.
Gemma [00:05:52] So if we're thinking about it as a pipeline as opposed to a chain, I guess the question then comes to what does it mean to build resilience into a system? Because, of course, with a chain you could be talking about, I don't know, stronger links and better metals so that it doesn't crack. But with a pipeline, is it a case of, you know, putting more stuff in or making it flow more smoothly? What does it mean to build resilience into this pipeline model?
Mark [00:06:17] I've heard the word resilience used probably too many times now to the point where it's losing its meaning. For me, resilience is about reliability. It's about robustness, and it's about the ability to react to trigger points and spikes in demand as well as the opposite. One of the converses of the supply chain and the COVID effect that we've had in the pipeline is what I termed a bounce effect. Once this supply pipeline fills up and we have product in stores, that's not the end of it. People still have product in their homes because they're overbought. So effectively, the pipeline stops. The tap doesn't need to be turned on and that goes all the way back upstream. So now we have a reverse effect. And when you look at resiliency, it needs to not only take care of the unprecedented spike in demand, but it needs to think about the bounce that comes afterwards to then say, instead of thinking about demand in the normal context, at the normal level for a period of time, demand in demand is going to be lower. And I need to factor that into the way that we refill our supply chain. So resilience has two meanings. It has how do I cope with the high demand, but how do I cope after that high demand when the demand drops?
Gemma [00:07:39] So what does that mean in terms of, I guess, traditional supply chains vs. thinking about more modern approaches or perhaps approaches looking to the future? You know, you're talking about resilience as reliability, robustness, and ability to react. Can our traditional supply chains do that? Is COVID just a one off or do we need to rethink how we approach the idea of a supply chain?
Mark [00:08:01] The reality is that supply chains have been thought of in the same way for a long time. The first time that the term supply chain really became to be used was 1982. So we're talking 38 years down the track that we've been using that term, and largely the principles have been used for that period of time. But what has happened in the interim is that we've had a huge advance in technology that enables us to think differently about the way that we execute the supply chain. One of the fundamentals for me in doing that is to look at visibility in the supply chain. So, visibility for me is paramount. The understanding of what I've got and what state it's in, at what point in the supply chain. Because if I don't have visibility, I can't be resilient. I can't react to demand. I can't react to supply problems, because that's another thing that we didn't see but could have been there, is that supply sometimes fails. So visibility inherently increases resiliency. Unfortunately, in my line of work and what I do, I see too many organizations and as recently as a week ago that operate the supply chains with spreadsheets. And if you want to understand anti-resilience, then that's the world that you live in. Visibility is fundamental to the whole equation.
Ad [00:09:29] 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 [00:10:01] Is that a case of turning to more advanced technologies or is it a switch of mindset?
[00:10:09] You know, because I think when we talk about data and being able to see things, you know, of course, there is an element of being able to connect the dots in terms of all of the information that you're creating. But there's also a kind of, I guess, predictive or more maintenance approach to looking at the information as opposed to sort of just reacting to what's right in front of you. How would you say getting to this visibility point should be for businesses?
Mark [00:10:35] Yeah, and some of it is new. Some of it involves refreshing what is in place, revisiting what is in place to be able to say we have less than optimal visibility and we need to update the technology to give us that visibility. Modern technology will do that. We have things like IoT. We have smart sensors on supermarket shelves that enable us to know the moment a product leaves. So, we have the capability to have that visibility. But it's just not inherent in everybody's supply chain. So that's a key part of it for me.
Gemma [00:11:311] So you mentioned visibility being core to what businesses need in order to kind of, you know, enhance their supply chain or make sure they have the most resilient supply chain they can.
[00:11:21] What else do they need beyond visibility?
Mark [00:11:25] Beyond visibility is this idea that they need to identify patterns of data. So, it kind of moves into the area around analytics and it moves into the area around artificial intelligence. Now, these are all technologies that have become more readily available. So beyond just visibility, beyond knowing what I've got, where I've got it, and what's about to happen to it, I need to understand the pattern of it. Where has it been before, where could it go? Because if I understand those things, then I'm able to make decisions quickly, which will impact that before bad things happen. So, understanding that is a key part of visibility. What's a key outcome of visibility, rather.
Gemma [00:12:11] And what about being able to, I guess, forecast the future then? You know, is that about having a better understanding of the present? Is it about using historical data?
[00:12:20] You know, is about inventory visibility and tracking? How is supply and demand the way that it's managed, how does that need to fundamentally change in terms of this forecasting point?
Mark [00:12:32] Forecasting is a really tricky one because no one would have forecasted COVID-19. Right? The challenge with forecasting has always been the massive calculation that needs to happen. If you really want to get serious about it. We've seen in the last five years the growth of a term called data science, where we have data scientists now employed in full time roles and organizations. And that role is all about taking the massive amount of data that we now have and trying to make sense of it, trying to find the patterns of that data. Now, without technology, you would have to do that manually and the task is just too big. Given the amount of data and the time required. By the time you've calculated the forecast, the event’s already gone. So fundamentally, the rise of cloud computing and the capacity of compute power, sheer compute power has allowed us to generate forecasts quicker, more accurately, and using more sophisticated models than we've ever been able to do. Now, that doesn't help when the typical organization only looks at approximately three to five years worth of history to derive that forecasting model, because the last time we had an impact like this was probably the Second World War on the supply chain or the supply pipeline. So, forecasting models are absolutely inherent to the whole visibility and the execution of the supply chain. But part of the learnings that have to come out of COVID is how do we derive better models that enable us to pick up these events earlier, react to them earlier and execute on the messaging. I talk about the move from data to automated decision making that is largely managed through artificial intelligence. We just don't have the time or the capacity to do the calculations. So, let the computer do that work. But let's think about the models that describe what we needed to look for to be able to generate that forecast.
Gemma [00:14:40] So you mentioned AI systems there and trying to find patterns, but is it just a case of, you know, getting some AI and now we have visibility? What does that really look like from a whole scale business perspective and all the different parts they can plug in?
Mark [00:14:54] Visibility primarily comes from connected integrated systems. For instance, having just a spreadsheet on its own, telling me where stock is at a point in time doesn't give me the right degree of visibility. Why? Because the spreadsheet gets out of time very quickly, sometimes can be inaccurate. That doesn't give me the requisite level. But where my systems are connected, and I understand what happens when it happens. That's important. AI is an outcome. AI is a higher-level technology, but it needs that fundamental data first before it becomes effective. So visibility through interconnected integrated systems. And what I'm seeing a lot more of now is the conversation that says visibility extending beyond our boundaries as a company. My boundary is when the product comes in and when the product leaves my business. But if I have visibility beyond that into my suppliers’ supply chain, into my customers supply chain, that gives me inherent more ability to manage my own supply chain. So, visibility comes from fundamentally the organizational systems. But if we can extend it beyond that much, much higher level.
Gemma [00:16:12] I want to talk a little bit about, I guess, some of the changes in consumers as well. Right, because we can talk about the way we manage supply chains reacting to big global events. But I think one of the other big changes, or at least some emerging changes of the past couple of years has been the expectations of consumers when it comes to how quickly and how easily they can get what they want.
[00:16:35] They want everything real time on demand delivered tomorrow, always at the store. How does you know this kind of expectation from the consumer fit in with this idea of a resilient or reliable supply chain? Is that – are they incompatible? Or is there a way of still being able to fulfill that demand?
Mark [00:16:54] The reality of that statement is that consumer behaviors have changed and it's been encouraged by this always on world. So the fact that I can purchase 24/7, I just go to my laptop, create a purchase order, buy something on the web and organizations encourage it. It's part of our growth. The reality is that supply chains have been slow to adapt to that. They have not taken the rise of the modern consumer and particularly from the millennial onwards, where technology is something to be taken up. It's something to be used. Whereas the older generation tend to have avoided it. So the ability of the supply chain to adapt to those is fundamental moving forward. If we are going to really build resilience in the supply chain, we've got to think about that always on economy and how we haven't always on execution models. So coming up, with new delivery models, coming up with innovative models of the way that we can deliver through the supply chain will drive businesses to growth. Those that don't adapt, that use the traditional models, will find a decline because customers will go where their demands are satisfied.
Gemma [00:18:12] What about, I guess the discussion around the environmental impacts of all this, because one of the biggest, I guess, criticisms of this always on economy and this demand is that we're putting a lot of, don't know, extra demands on use of fuel in order to deliver and different kinds of packaging, for instance, or more packaging instead of going and picking up stuff, you know, directly. How does the, I guess, people like yourself who work in this space and think about this space and think about the trends more broadly in the space? What's the conversation like about environmental impacts vs. or alongside keeping up with what consumers want?
Mark [00:18:50] Environmental impacts of front and center of a lot of the supply chain conversations.
[00:18:56] The reality is that if I take Australia as an example, we're an island nation. The majority of our consumer goods are imported into Australia. And that implies that they are put on a ship. They are flown into the country. And there is some environmentally non-friendly way that they get to the country. We're finding a lot of the customers that I work with are looking at their supply chains to think about how they make them more sustainable, how they can carbon offset, how they can come up with better methods of delivery that satisfy an always on economy.
[00:19:35] I read a book many years ago called The Gold by Dr. Eli Goldratt. And it was a book on what he termed The Theory of Constraints. It was the first book around the theory of constraints. And one of the things that he put in that book was the ability to manage flow of product rather than capacity. Traditionally, supply chain has always been about capacity. How do we manage to fill capacity at various places? And what his concept was, if you manage the flow, the capacity constraint will always move. But the flow enables – is enabled to manage the best efficient path of a product from source to destination. And thinking about it in that terms leads to an environmental or a sustainability conversation which says if we manage the flow better, then we manage our environmental impacts better. For example, how do we as a nation think about our supply chains together, not just individually, not just one supplier at a time, so that we maximize the efficiency that instead of having multiple shipments from multiple suppliers in multiple deliveries? How do we collaborate on the supply chain to get efficiency and thereby reduce our environmental impact?
Gemma [00:20:55] Yes. Let's talk a little bit about the role of suppliers and distribution networks. How can organizations be rethinking the current models here in order to be more adaptable and get to this flow that you speak of?
Mark [00:21:07] There is a lot of work being done around rethinking the models. Again, with the recognition of the supply chain issues we've had, it's been the issue of how do we change the model to get it better? Thoughts that have occurred. Things in transport and logistics. Instead of having people go to a store to collect goods, use a subscription service that acts as the last mile delivery partner. That, one, addresses this short timeframes, that always on economy. But the other thing is that leverage is an economy of scale where one driver could be servicing multiple households as my driver when I order a meal on a Friday evening from the local restaurant. He doesn't just pick up my meal. You'll pick up four or five and deliver it in one drop. That's far more efficient than me going to get the meal someone else and the multiplier effect of that. We think about things like drive through collection. Well, everyone's gotten used to, I guess, the thought of click and collect. Pre-COVID, and certainly highlighted through COVID. But drive through collection has now become more of a driving force in the conversations that supply chains are having, In Australia one of the things we've always had is drive through bottle shops. We love a wee dram on occasion and so we have drive through bottle shops where we can drive through literally and collect it. But what about that as a model for whole stores where instead of having to go into the store and pick up the goods, you can order online, drive through, and collect or drive through and collect the small things that you need. Social shopping. The rise of social shopping, where I might have a network of friends and we collaborate around our shopping rather than individually having to do it. So, there's all sorts of distribution models that have been talked about. And I'm really excited to see what the next few years hold in the way that these come to fruition.
Gemma [00:23:06] Speaking of how things are, I guess, changing and coming into fruition. Do you feel that the COVID crisis and the impact that that's had on supply chains – has that somehow, I guess, accelerated innovation and accelerated businesses that work with, you know, people all across the supply chain, changing things, adapting and adopting these new models? Has it been this sort of moment of, okay, we really do need to think about doing this better, stronger, faster?
Mark [00:23:38] Very definitely. We're seeing a lot more collaboration. I'm hearing a lot more conversations about collaboration at every aspect of the supply chain from store back to distribution center, distribution back to supplier. So much more collaboration now happening between the back office retailer and the suppliers in terms of not just what products of mine are you going to sell and at what price, but how do we collaborate on the forecast so that your forecast becomes my forecast and I share my forecasts upstream with my suppliers. So, way more collaboration, and I think that model is going to only increase.
Gemma [00:24:21] What would you say is the biggest challenge for people working in the supply chain? You know, you mentioned this idea of getting to this idea of flow. What's stopping that change? Is it just you know, everyone's used to using Excel spreadsheets and it's too difficult to try and get people to get on board with new technologies, or is it something more than that?
Mark [00:24:41] A lot of it goes back to the human factor. We're comfortable with what we already do. And changing the models of the way that we work are difficult. Change management has become a big industry because of it. And one of the people that first documented what happens in the supply chain was in 1961. A gentleman by the name of Jay Forrester. He called it the Forrester effect, or the bullwhip effect. And what it was, he likened it to when somebody cracked a bullwhip. A small movement of the hand leads to a massive move of the whip at the end. And there are waves of movement. So, if we think about that in the Supply-Chain, what happens is a customer buys a single unit of a product. Because the retailer cannot buy single units, they have to buy a box. So, it amplifies the purchase of one. As that moves up the supply chain from the retailer to the wholesaler, they have to buy a case. When they buy from the manufacturer, they buy a pallet. So, there's an amplification of the demand signal as it moves through the supply chain.
So if we think about flow and we all can agree or get a balance on what that quantity might be like, instead of having to have an amplification, we create this even flow through the pipeline, which becomes more manageable and also less vulnerable to supply chain signals. So that we can really manage it clearly.
Gemma [00:26:11] When we think about businesses improving their supply chains, can they start with just one thing or is it about overhauling everything at once?
[00:26:20] I'm thinking about short term, medium term, long term. And those improvements of supply chain over time, because, of course, it could seem probably quite overwhelming to say you have to overhaul all your systems. Is it possible to make it easier? Break it down into just one or two things start with?
Mark [00:26:37] Yes. And I would absolutely recommend that to anybody. Don't try and eat the elephant all in one meal. Just break it up into bite sized chunks. There are many things that you can do. First of all, be critical around the visibility you have and the speed with which that visibility is available in the organization. One of the other things I often talk about is velocity. Velocity is the speed with which we can make decisions. But it's also the speed with which that visibility becomes apparent. So for me, fundamentally, visibility comes first. The second thing then is velocity. Being able to make decisions quickly. If it takes me three days to react to a huge increase in demand, then I have not been able to make my supply chain resilient. Back in the old days, when I used to be a production planner, I had to do everything on paper. And that, unfortunately, tells you that I've been around for a while in this game. And it took me a long time to react if new orders came in or if marketing wanted to change the promotional calendar. It took me a long time to recalculate that. But if we can do it in minutes, then it means that if a demand event occurs now, I can react to it now. So first of all, visibility, then velocity. And then lastly, volatility. The analytics that over pin the data. So, if an organization has already got that visibility and they are comfortable, they can make decisions quickly. Look at the way that you look at your data. Start to understand the patterns of your data. Start to understand which are the products I need to pay attention on at a point in time so that I can really avoid the traps.
Gemma [00:28:30] So I guess, final question. What does the road ahead look like? What's the single most important thing organizations should be doing right now so that they're ready for the future?
Mark [00:28:40] I can think of many things, not just a single one. There are a number of points here. If I think about a single thing, one of the crucial things is to get control of the data around the supply chain because that will create the insights they need to make the changes. I spoke to two customers recently and both of them pointed to the fact that data is centric to the way that they are remedying some of the negative effects that they've seen in their supply chains. Think about this. If I'm a retailer and I sell a thousand products, it's really difficult for me to understand the detail of every single one of that thousand products. But if I can take the data and identify of those thousand products – the volatile products, the ones that are really susceptible, the ones that are impacted the most, I can focus my efforts on addressing those ones and leave the ones that are stable. Now, conversely, when this all happened in the supply chain, I would have thought flour, pasta, toilet paper of the most stable of products, but they weren't. They were the most volatile. So that also reinforces the fact that volatility and stability are points of time. If we don't continuously monitor that volatility and the stability, we could be treating a volatile product, as stable and vice versa. Therefore, the science of data around the supply chain enables us to not just identify what happened, but fortunately now the technology is such that we can predict what will happen. And that, for me, is one of the biggest changes in the way that we can look at this.
Gemma [00:30:25] Amazing Mark. Thank you so much for sharing with us your expertise and so many brilliant examples. And also just a little bit of, you know, it really getting into the root of what happened this year, because I think there's still a lot of confusion as to why these systems that we've been using for years and years failed us and how are they going to be coming back up. So thank you so much for joining us on the show and really enjoyed this conversation.
Mark [00:30:45] It's been a pleasure. Thank you.
Gemma [00:30:50] 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 episodes, please do take a few moments to rate and review the podcast. It really helps other people discover the show.
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Ad [00:31:19] 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.