#81: Webinar: Supply Chains After COVID-19

Alcott Global hosted a webinar entitled, "Supply Chains after Covid19." Dr. John Gattorna, Roxane Desmicht, and Frederic Laluyaux joined us as panelists. The main topic of the webinar is on navigating through and out of the COVID-19 crisis and the changes we need to expect in the Supply Chain Industry.

Panelist: 

• Dr. John Gattorna - global thought leader, author, and consultant to Fortune500 MNCs
• Roxane Desmicht - global VP Supply Chain of ams Sensors Germany, one of the largest semiconductor companies in the world
• Frederic Laluyaux - CEO of Aera Technology, the cognitive automation software to transform your supply chain

Discover more details here.

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Transcript

Radu Palamariu:   0:00
So, without further ado, let's let's start the They start the discussion and you start by introducing first the panel and I'll start with with John joining us. The executive chairman of Sydney based specialist advisory business, Katarina Lyman, And he is one of the most respected supply chain thought leaders globally. He has written many books on Daikon. Any books for the industry? Ah, a few of them. I have read myself and and he has also been included in the Hall of Fame of the Council of Supply Chain Management Professional CS CMP, which some of you may know, is one of the most prestigious organizations in the world. John Welcome and Thanks Toa Joining us.

Dr. John Gattorna:   0:41
Thanks for Eddie

Radu Palamariu:   0:42
on and then Roxanne. Roxanne is a senior executive and global leader with 20 years plus in the high tech industries. She is now running the global supply chain for AMS, which is one of the top global semiconductor companies. And she's an active promoter and driver of industry 4.0 initiatives as well as gender diversity and leadership projects. Roxanne, Thanks for making the time as well.

Roxane Desmicht:   1:04
Good morning, everybody. And looking forward to an active interaction

Radu Palamariu:   1:10
and and the Fred Fred is the CEO and co founder of era technology. Era is a cloud based supply chain. Intelligence software solution are very simply put. Air understands how your business works and makes real time recommendation to enable a self driving enterprise. Tried to era of friend has been an entrepreneur even even before, So he was the one that set up and lead toe i p o n A plan as, ah, many of you know, which is one of the best supply chain software companies in the world on, basically was valued at more than $1 billion. Fred Andi He's joining us from California. So quite a bit of a different the time zone friend. Thank you for making the time.

Frederic Laluyaux:   1:51
Thanks for having me good to be here.

Radu Palamariu:   1:53
Super. So let's let's start with the first question that we have, ah, prepared and and the current reality that we are in. So the topic today is supply chains after covet. But let's 19. Let's start with where we are today and I'll start with you. John. Um, how do you see the situation out? This your clients coping with Corbyn Nineteens and what are some of the main challenges that they have been faced with.

Dr. John Gattorna:   2:20
Thanks, radio. Well, before I just answer that specific question, I'd say one of the good things coming out of this crisis is that I think there's, ah, rapid, increasing recognition that supply chains are pervasive in our lives. Um, a lot of the previous work has been done in supply changes being focused on infrastructure or focused on technology on has been missing the people stuff. And now I think we have a recognition right down to the consumer level that supply chains are in fort. You know, a factory stopped and what stops and retire was close. Things don't move. And we, you know, as consumers go back to living locally and doing the best we can. But look, this current crisis standing on the supply side, um, and really a lot of companies, their initial attention, Waas, looking to understand how they could get the supplies they had ordered, Um, and the particularly critical autumns and not any companies but governments of being really shown to be somewhat caught out by this now because of one major thing, and that is that we've had on over dependence on China for a lot of our components and equipment. And this is growing up due to, I think, over a long period due to the globalization movement, which will talk more about later on how that my change. So I think that's been the initial face which happened in the 1st 3 or four weeks from probably really my artist Rachel around about mid April or late April. And now, of course, with China getting back into the factories and starting things up, the whole thing is changed again to being a bit of a demand problem, because the demand out there is his, of course, reduced incredibly, because of retired, was shutting down. Everything else has been quite an amazing situation where we styled off with a supply issue. And of course, now it's going to demand demand issue and the people that we know trying to manage both one of the good things for people who are in facilities around the world, three pills and others is that distribution centers are being master order after, and stock, which is, you know, was on the water as it were to its destination, is now sitting in dissemination warehouses and that the digging it on the water initially, But it's outside of factories and sitting in origin, they say. So those people who are property developers and and distributes offenders and so on are doing quite nicely at the moment. What? We'll have to see what happens in a little while. Thank you,

Radu Palamariu:   5:07
John. And from manufacture prospective Roxanne, what were I wanted to ask you in a m s? One with some of the biggest issues that you experienced And it was a shock to the system, right? I mean, on top of the supply and demand shocks, maybe just to share a little bit from your perspective in and where you where you are now.

Roxane Desmicht:   5:26
So I think it came in in a different waves. So for us, with its off course started with threats on supply, and we indeed have a lot off supplier in China. So the challenge started already beginning off February. So just after Chinese New Year on, it turned out to transform through times from a pure supply issue to supply plus logistic, because when companies started to go in, lock down, then the lanes which you would use to transport your cargo would simply to disappear, particularly when you are relying on commercial Benny off off the airplane. And then it started to become, ah, challenge on a global way because we don't only have, of course, we have a lot off supplier base in in China. But we have suppliers all across the globe. And then, when policies started to come in with work from home confinement in Germany, in Austria, in Italy, um, then the problematic became much more challenging than what we saw. It was already challenging just after Chinese New Year, so the bar was raised inthe e level of complexity. We had to manage to look at how ah, roll through off supply and manufacturing connects not only because some off our partners would not operate, but also some off our logistic partners would also not work in the in the proper time. And then it turns out to be to become also a manufacturing problem. Um, because we also have to see how we keep factory running. We classified as mission critical Industry answers should be able to continue to operate. And if we continue to operate, how we make sure we for follow regulation and rules so that we can continue to operate. So it became from an external view, internal challenge on That's how that's how. That's also why we decided from Emma's perspectives that all function we can work from home. We work from home and we dedicates toe working in offices which are really working in the line. We pay a lot off attention on making sure same distancing is is guaranteed on all those kind of things. And then what we will see now coming up in the late off you two and two threes. How is demand? Because, I think in Q one one's premises off the crisis started most off. Our customer decided to keep the demands they had because they wanted to make sure it is Ah, Donna. Wrong would be far as they could still be able to operate and received goods from our side on in Q two. Most of them have continued with the same perspective. Um, but we all knows likely the overall global demand has slowed down, and that's change. And this I expecting to strike you for to start to facing more demand challenges when the supply gets back on track with, of course, China having almost fully recovered and the other countries having from their way around in making shows that supply can continue and manufacturing. I'm so a multi phase and a multi dimensional challenge for manufacturer,

Radu Palamariu:   9:15
right and Fred from, from your perspective, Europe from a software technology perspective. Now digital solutions having visibility, knowing where your cargo is knowing where your product is is has never been more important than being able to make those decisions in real time and on, well, tell us a little bit from era perspective, how how you helped and how we'd worry for your clients around this times.

Frederic Laluyaux:   9:40
Yeah, it's been It's been very interesting. I would echo John and initial, you know, supply a crisis. But it became very quickly. There was what Roxanne was saying. The perfect store. A lot of our clients are CPG companies, life sciences, all in gas manufacturing. That's a majority of them. And yeah, after the initial question on supply, came basics basics see dramatic behavior, changes in demand with consumer and enterprise hoarding s. So we had to help them understand those patterns and how to redirect their invent Cherie, because this seed is so horning behaviors, and it was hard to identify, given the complexity and the size of this company's you touch on the manufacturing capabilities, right? I mean, driving PP equipments to the factories, dealing with the employees, not showing up for not being able to show up and went up 30% of the workforce was not able to be their You know, their factories for one of our customers having to reassign people. So again, people at the center of the equation, but from demand signals being completely, uh, you know, hard to understand to manufacturing logistics transportation very, very hard to manage on and, as as I think, writes untouched on coming out of this crisis, the new normal where market shift are going to be happening and very plaque situations to anticipate. One of our clients, for example, manufacturers a lot of the the product that you used to to sanitize your hands sanitizing child and all this kind of good stuff. But the market Post Cove, it will be completely different. It will be a much broader market, but this crisis has generated a massive amount of new entries in the market, so you categories are being created. Eso you know, the perfect some supply demand manufacturing, logistics, transportation. All of this hitting at the same time combined with the core issues around people either working and confinement, not being able to go to the manufacturing sites. So that really created for first some four kinds, for sure.

Radu Palamariu:   11:53
Mm. And I'll stay. I'll stay with you friends for the next question and kind of look to the future, right? And what we will see coming out of this lockdowns, right? Because now more or less us has been easing lockdowns. I think about half of the states are back to some level of activity. China is pretty, you know, has done a fantastic job. South Korea, Taiwan. Hong Kong is there's more and more in Australia, obviously as well. Eso the world is slowly coming out, right? So how do you see? How do you see things in the next couple of months or what will be the You know, the impact on do some of the things that will happen around my chains.

Frederic Laluyaux:   12:32
Look, I think couple of months is gonna be too early to tell when we talk to our customers we spend a lot of time discussing with them. The CIA, they see a long recovery. And to see a recovery that will be differentiated by, uh by geographic areas is not going to be like everybody is back to normal and the trigger off, uh, you know, stay at home policies is only a small one. Yes, it will enable people to go back to work. Work didn't stop. The profound impact on supply and demand is not directly related to people being able to go to work. Think in a digital world. A lot of people were able to work. So, yes, factories will be able to work and truck drivers will be able to be back on the roads. But I think Showtime. It's very hard to predict what's gonna happen. We know what trends Ah discouraged situation is creating, but we're seeing a recovery that's gonna be very differentiated by region on by industry. As I said, you know you'll be you knew you market will expense a mother's will. Dramatic the contracts. Consumer be abuse will change. Ah, supply will change. We're seeing a lot of our customers right now talking about secure externalization. Some of them talking about taking down 30% of their skews. So basically, you need you need the hand side it as around the shelves. You don't really care if it's coming in three or five different bottles and four or five different flavors. You just need to provide it. So I think that rationalization of supply chain that rationalizations excuses happening. And then, of course, we'll see a complete rethinking off supply networks, right? I want to make sure that I have more than less dependency on the small number of suppliers more opportunity to actually supply locally. So I think all of that are big conversations. Onda. Lot of our customers are currently looking really hard into their suppliers network to see how they can avoid a crisis. Lexie's from from recurring, which is really the, uh, what What people are worried about is that we're experiencing like the first wave. But there could be aftershocks, and you have to be ready for these aftershocks. And I think so. So, again, back to my point of perfect storm, I think they're all everything is in the air supply demand. The volatility is there and then fundamentally trying to secure the ability to make less products and deliver them to the consumers in a heinous, uh, you know, Kobe profession, I think, is what keeping all the customers are active right now

Radu Palamariu:   15:09
makes sense. And Roxanne, I'll shift to you and I want to. And we received this good question and I'll go a little bit foot with the question toe to Fred. One of the listeners were saying, Do you see some, you know, some some reshape coming up in terms of the supply chains like we had just in time. Now, obviously, that doesn't work in a covert situation. You know, we more people. One more diversification because you don't want to put all your eggs in one basket I China and and all of a sudden the stock or, you know, re shoring of production units near to you to your consumer demands and your markets. Do you see any of this trance coming coming? I mean, from your perspective on the manufacturing side.

Roxane Desmicht:   15:49
So from from my perspective, yes, that will be renewed and strengthen attention toe what I would call business continuity plan, which, in general a supported with flexibility, so flexibility is ah in your supply obeys with doing sauce or Monty saucing flexibility in in your manufacturing locations that one product could be qualified in two different places so that if one places down, you can switch over. So that will be more conversation and maybe a higher level off attention and desire from sis way to invest in Ah, so stop example. Because we all know I mean, we have also to talk about the realities we cannot do. Dual sauce, everything, um, in particular in technology companies, sometimes the material you sauce as a very unique quality where you don't find set themselves so easiness you will never be able to have a full fledge of full flexible supply chain. And even if we if you would see this, this comes with a cost so injured in traditionally company are usually reluctant to invest. I think this pandemic Azaz push more attention and more desire to at least look at some items where you can really, because they're high volume, you can really make three effort toe really to building this flexibility. So this is one aspect. A second aspect may be going to the question on the just in time in deeds we are currently. So we started. Ah, internal discussion on how do we prepare for rebounds? Because if you would look at the situation today, you tend to be more conservative you than to reduce your factory loading so that you don't overbilled. But it is rebounds his very steps and you might immediately end up in allocation mode. So pharma under oversupply toe undersupply on this. It's extremely important to be very alert on to establish your right demand sensing methodology, Um, depending off Carson segment, because not all segment will rebound in the same way, depending on your customer portfolio, because not all customer will will react in the same way, but so that we also take this opportunity to bill selective buffer for the right products so that we are ready to support the rebounds, which is likely to come. So I was listening to a podcast this morning from economists. They're likely to come in second, all from the year and definitely very strong in 2021 Aunt has. I think that's ah, that's where supply chain us to play a major rule on selecting writes horse to bet on so that you don't end up with obsolescence of being creative in finding ways to do. Ah so me finished goods stocking, which in our industry is obviously possible, Maybe not in all industry. So that's way are prepared. And we are also discussing To be prepared for location means the type of report we need, the type of process we would like to have strengthen out and Roberts knee design so that we can handle an allocation situation should it happen immunity after the crisis. So it was a lousy current conversation. We are, um, eschewing

Radu Palamariu:   19:50
and to the point, and we actually got you also question to your point, Roxanne Recovery one won't be consistent across customers and regions. And I want to ask you, John, because obviously I think you pretty much coined the terms of, you know, segmented supply chains. And and not all clients are equal. And you should, you know, you should focus on your partners and and and make sure that you create those buckets right in terms of what makes most sense to you to your business, tell us a little bit about how companies can think from that perspective from segmenting their supply chain operating waters, depending on the you know, on the clients and their behaviors and what would work best?

Dr. John Gattorna:   20:28
Look, a lot of the solution going forward is going to be companies just having a good hard look at their organization design. I have been saying for a long time that the current designs that most organizations I see around the world have at the moment are about 200 years old and at the end of their life cycle, it's the high tech companies is that it's the fast fashion companies. It's it's cos pick companies that are really breaking that mold and doing something different. Um, what we have to do is get away from this sort of one size fits all approach. And quite frankly, we've been pursuing the wrong sort of customer segmentation methods up to now because if you if you segment your your customers are based on sort of institutions, you know, the wholesale of versus retail of versus I don't know, contractor versus electrician's versus something else. All those institutions that add up to very often many companies having 12 to 15 segments is too many. We've got to start reducing complexity in the way to do that is to go for what I call behaviour segmentation and where you can get down to cut across all those different institutional segments to maybe four. What I'm gonna be suggesting going forward is that we have we reorganize their organizations into what I call business As usual teams business as usual, Will will take care of the business that goes from base load. Very reliable standard. Aziz Roxanne was talking about perhaps up to a certain amount of volatility, maybe 20 or 30% plus among the squad out forecasts work. That's what I would call business as usual. And we have to develop teams that can cope with, uh, using different combinations of processes and technologies and different types of teams to handle that. Beyond that, I think now that we've seen what what a really major interruption conduce to the world. We had gse we had, um you know the dot com revolution. We had things like that in the past. Nothing like this. I think going forward, we can expect more. And so I think we're gonna have to Organizations are going to have to develop. I'll call it a smart team sitting to one side, a small team working on a purely on contingency plans and thinking about work on drawing all the functions but putting a small team together, drawing whenever technology that can to be at least semi prepared for whatever it is that we're going to be feisty next time around. A fascinating thing. I'm found and I've been talking to some of the best companies in the world over the last four weeks in the Industrial Spear, they said. What they're saying right now is that a increased cooperation between their functions and getting things down in improving, you know, the responsiveness in the light of this sort of adversity we've been having. And the story is, if if we can continue that in a more formal way, rather than just doing it when we've got an emergency. I've been talking to companies in South Africa, a running transportation and ports from trains and things. They're telling me they're running at 60% capacity with 40% of the headcount. So what does that tell you? It tells you, you know it tells you about productivity. It told you about people's willingness to change under pressure Somehow we've got to get that same mental attitude and it's going to mean the structural employment, which is another question. We've got a redress in turn into training and vocational training and so on. But this is good use if we can carry that sort of goodwill through to the future and stop fundamentally, I think it's a generational opportunity. We've gotten privates, and those companies that don't pick this up now and start working towards it are going to be absolutely floored when the next major disruption comes.

Radu Palamariu:   24:33
And I'll stay with you, John, because I want to probe further and you've seen a lot of companies. You've consulted to a lot of companies and is specifically for this, you know, flexible models and organizational design. And and I want you to to see if there's one example that you could give. You don't need to name it necessarily, but I think and we've got in a few variations of the same question and that question keeps popping up, which is how to manage this recovery is if it's gonna happen in different times. So different companies with different for different countries with different markets and what kind of organizational structure would support that flexibility. So if you can think of an example, or if you don't have an example, maybe how would you do it that their listeners can practically take home some?

Dr. John Gattorna:   25:13
Look the problem in the in today's enorme it. We all accept that things are happening fast and you know about the timing like forecasts and implement those forecast. You're already out of diet. I think they're probably the best example I can give you. It's it's probably triggered an example. Uh, and they've been doing it for a number of years. Is are in the fat in the fast fashion. They have the advantage, of course, of having around stores. They take the information on a daily basis of what's happening in this stores. They feed that back to their planners. They've got functional specialists inside the business unit, manufacturing, logistics, sales and marketing. But they also have teams a multi multi disciplinary teams who, um, Sir Condit out of those facts long teams and come together and focus on different aspects off the edge. I'll sort of fast fashion business that they are. They are trying to service, um, that that is in women's fashion turn. It's in men's fashion that's in home, home furnishings, etcetera that they are. You know, we've seen similar things done by Eddie Desk when they bean sort of sponsor for ALS, the garments for world caps in the past, where they bring bringing multi discipline new groups together and giving them targets. I'm getting them to work together and relating to We're not going to get rid of functional people. But the problem is we can't expect French functional specialists to a managing business birdie. To do that one day and be managing the business roles don't leave the next, because the customers at the end of the line today have become so demanding. They want instant gratification. So I think it's the speeding up of the customer demand that's going to force organization designed, I think, in the industrial side of the world. There's no better example than Snyder Electric, who have adopted whole multiple supply chain approach four or five supply change, different configurations, servicing different customers precisely and getting rid of the over servicing of the younger servicing. That's having a big impact on the business because it's getting rid of a lot of the unhealthy infantry that I've been having. And it's also family enough. One of the side of pics of being more precise about the way he serves customers and giving them what they want. No more on their list is that you end up with a lot more satisfied customers and because you're delivering on the promise, and as a result, they tend to buy more. So the impact this saying is that not only is getting the constructors down, but it's actually having possibly be impact on the top line revenue and something expect going

Radu Palamariu:   27:56
toward jump gentle Fred, because I know that era, you know, you do a lot of automation in the supply chain. You get a lot of data. You, um um e I think you call it cognitive supply chain automation. And then I was wondering if you with your clients can also plug in, and we talked about some examples before, But you know how? How can era help also and what you've seen applied to this kind of situations and scenarios where you need a lot of flexibility in your supply chain and access data, interpret data and then take actions based on that.

Frederic Laluyaux:   28:29
Yeah, Zaveri. Interesting moment, Because what we build is cognitive automation, right? We automate and movement a lot of the decision making process that is sitting between strategy and execution center of the pyramid. The reality is in peacetime. The center of the pyramid is already clock Talked to any of our clients. All said the same thing or planners don't have the time to to do what they're supposed to do. The only Dutch 20% of decision just supposed to Dutch. So there are two processes that are opening. The 1st 1 is to try to increase the accuracy of your forecast of your predict, to ease the pain basically and increase the accuracy of the decision that I made at the center of the pyramid. But of course, you hit a situation like curve in all your signals. Go off and you're beautiful. That are science based models are completely useless for a while because, you know, how can you predict that? Someone that that that your products gonna be off the shop of a night if you're sailing eso por or past our rice on Been using with Lovett? 19. So what? We've seen our clients Disc refocus, actually, on two areas the 1st 1 is visibility, real time, visibility and to and what is happening in my supply chain and actually what I call actionable visibility, which is what can I do about it? Give the example All Europe, one of the largest lifesigns company in the world, reaching out to us and say, Can you please tell us for right now, which are the hospitals of the distributors who are hoarding because we have a responsibility to making sure that the supply that we deliver our are delivered in the right amount of the right people? You so in the U. S. A lot of the scandals around this and sometimes fair or not fair are you lot organization being tax of not playing fair with the different states and so on so forth. So we went from this cognitive automation trying to optimize the forecast of the long term and and really look at ways to gain percent here in service level and gash on costs and so on, so forth to real time, visibility and ability to re plan and do what if scenario in real time and that became it is right now, the number one driver off of activity we are seeing. And I was talking this weekend with two of our customers saying, Look, removing from a 3 to 4 weeks planning cycle, trying to plan 13 14 weeks ahead. We already today, we've already adjusted to be a to plan every plan. Every week off for four weeks arises the agility. I think roads on, which was touching on that agility is the key so understanding and now the human brain basically takes over. We talk about going from people doing the work supported by machines to machines. Do it door guided by people. And that's really the key, right? You got a lot of compute power to understand what's happening in your supply chain in your demand, your supplier, logistic transportation. But you have the brains of the humans here trying to really adjust out of the operating system. Musa is running, so it's the acceleration of the speed, from decision to action and from event to decision that we're seeing happening. And this is not a it will happen. It's what we're working on right now with all kinds

Radu Palamariu:   31:41
and Roxanne for you, a question and the kind of reality. I mean, I think we've all seen that it was meant to be a funny thing. But you know who has done the most in terms of digital izing your organization and so number one CEO, but to sitio number three Cove in 19 Andi people saying in 19. So Dio, do you see this crisis as an acceleration to you? No more digital solutions being adopted and implemented across supply chains. Are you doing Project Mawr even more or the m s or you're already settled Or how do you see this thing?

Roxane Desmicht:   32:17
Well, and actually, I'm not so sure. So where I see definitely a push towards more digital practice is in how it communicates how we engage, um, having tours which provides visibility in real time. I think that's definitely gonna be gonna become very, very critical because you this helps you to make so rights is the right decision Now, in terms off Ah, automated planning. Ah, automated decision making. Um, I would remain Ah, a little bit skeptical in descends as I think Fred mentioned ah e I learned from ah, maybe mashing. Let's put a I on the side. So machine learning run from the past. And when you faced such a crisis, there is not so much learning model you can ah, the machine can base itself upon Toby. Able toe correct or re plan repent appropriately. So I am a bit far. No, from my original picture off having almost no touch supply chain was human. Menu handles the exception to having a model where there are tools to assist decision. Uh, there are tools which gives you opportunity to do scenario, um, so that you can maybe make the best data supported decision. Um, but definitely not to zeal, extent where the human is completely out of the picture. As I was joking before we started this this podcast, I think we know company would survive today with fully digital supply chain, uh, in the sands. That's that simply too many new information coming up every day. So, in our case, I think in ah, in bad weeks, when there is a lot off new log down announce we might re plans the scenario three times and we might have for each now you Ah, a couple of variant. And I think no machine can really under this. This'll level off the level of complexity besides the human aspect, which is how you get out off a crisis is all about leveraging through your supplier engaging, communicating, re prioritizing, um, level playing on relationship and this on is a human can do. So, um, I was already a bit mixed because pure digital supply chain really rely on very accurate data. Very good input. Ah, and I think very few company, at least in the in the field where I operate, would have this level of precision that you can really trust with closed eyes, the outcome of the engine, and in the crisis months, this is even less possible.

Radu Palamariu:   35:29
Um, I'll stand with you are examples may head, and we have a couple of people listening in and you're coming in from a three pl perspective. And we got the question in terms of Ah, well, the logistics service providers are not in a great shape either. Right now, I mean, obviously, this whole destruction has destructed their their flows quite a lot as well. This cash flows finance a swell. There's a lot of risk of, you know, some potentially can go bankrupt and and, you know, some more consolidation in the industry. How are you? You know, how are you working with repeals? How do you see the relationship, you know, is a manufacturer to us three people partner moving forward.

Roxane Desmicht:   36:07
So I think it works for Well, for us. Very well is, um we are not to diversify ID. So we have a couple off partners. Um, this enabled us to build ah, strong connection with Jews partners. Um, and there's having zoo's connection. Um, and exploring option to face disruption. Um really proved to be successful. So I think we will continue with this. So it's not It's never gonna be the point to have unique partner, because I guess the risk would be too high. Ah, some partners are very strong in one region or in one country, a little bit less so in another country. You have the integrator on global forwarding, and this playing with a difference schemes and the different way of transporting actually really helped us in this crisis on bond. Thus, we will continue ah, strengthening zor relationship with our existing existing players. Um, so that we keep this level off exhibited.

Radu Palamariu:   37:22
Yeah. John I will have an elephant in the room question for you because you're probably the most neutral. Let's say that you can answer this. Yeah. Um, shift of manufacturing from China. Bean loads of discussions. Japan has actually publicly announced fund for companies that would relocate their production from China to Japan. I think obviously we've had the trade war that seems to be reignited. India has just announced a couple of days ago That's just that, Frank, you're away from China, U S manufacturing and manufacturers. What's your what's your take on this?

Dr. John Gattorna:   37:58
I think it's inevitable. That would be my comment there, I think, uh, leaving aside all the things that have gone on and who did this and so on, I think people have recognized on the procurement side we've gone too far. I was going to say earlier that I think we've one of the things we've got to do it. When I was a silly, it's get out. She supply toe chief procurement officers and pulling back inside under the chief supplies an officer. I think we've got to improve the internal coordination and direction of what these guys are doing because I think they've gone too far down the route of searching the world for singles Low cost sources. Um, I think the the whole argument plays into also the insource outsource argument. I know in Australia there's a big discussion going on now about you know which things should we make locally on get and get seed capital from government to kick off your approaches. I think three d our printing as gains, you become rich in flexible manufacturing and low scale manufacturing. It is going to come to the fore just like you know, a couple of days ago we stepped down from big steel mills, too many steel mills. So I think there's going to be a lot of thought going into outsourcing. And and on top of that, we've got to look at our our Ranger off supplies and try to understand not only their capabilities on what they can do. You do for us in costs or capacity, but what's their mindset? I think we generally have to understand, you know which supplies is going to be collaborative in good times as well as bad and stick with us. We supplies Ah, pretty transactional and go was whoever they want to go with which supplies have got capacity when we need it. We may not buy from and primarily, but they could have excess capacity. Which supplies have gotten sort of ah, more creative and mindset that you know, help get some pro sort of self. Some problems. So coming back to your answer, I think everything tells me that China is going to have to work really hard now to hang onto you, probably the share it's got of manufacturing. And I think inevitably it's going to move not only to other Asian countries, but it's going to slices of the critical items. They're going to move back to some of the Western countries and many for reasons of agility and protecting themselves in the sort of difficult times.

Radu Palamariu:   40:30
And just just a quick follow up question to that, because we've had this specifically and we have a couple of people that you need from it in America, from Europe, specifically in these two regions, right, Eastern Europe and in America, Do you see any potential happens where it could go so definitely from China? So the stages in Vietnam has been a great unit for now, but Eastern Europe and let in America. Where do you see a potential awesome

Dr. John Gattorna:   40:53
by those areas? I think you've got great potential. Um, I think Eastern Europe, you know, has got a good car structure right there. And that's proven herself in the past to be a pretty reliable supply. Um, and I think in South America we've got some pretty sophisticated companies down there in Brazil and some of the other places. So, you know, I think he is a big opportunity for them together and make a play for, you know, taking and picking some of that production up. So, yeah, I think it's going to be a lot more even. I think we're going to see a Cantonese looking on regional and local basis as well as global eso. Generally speaking, I think we're going to have to be a lot more sophisticated with their procurement strategies, that that's the bottom line. I think that can only occur if we pull procurement people in under the cheese supply chain officer because at the moment we've got too much procurement going on at the bank in which is unconnected with what's happening in front in business,

Radu Palamariu:   41:57
right, Fred I'll jump to you on the topic of digitalization. And I would be curious to see how your especially the potential clients, right? I mean, I knew seeing that more people are coming and asking hair, I can you help us with this and that I give you a bit more, more context. I get two times of answers, right? So, I mean, when we speak toe, all plans may be in the manufacturing side. Some of them are more, you know, like, you know, literally crapped. We should have had some social in place. But let's let's let's do it fast. And some other are like, OK, I mean, I'm not gonna go into crisis mode and do some system revamp or what not because I don't want to crash anything else. Andi, I need something as simple as you know is basically if you may. So I'm curious how you're seeing it from your perspective.

Frederic Laluyaux:   42:41
So, um, I see both, but I think it's not either war. I think what we're looking at right now kind of back to the point I was making a lyric is you need real time visibility you need, as Roxanne was saying, the ability for people to actually reply in re thing. Do what if analyses you do and it gets to a level of complexity. Need to have some computer assists for that, for optimization, for some level of predictions when appropriate. And I think, as I said, we we call it moving from cognitive automation in time of peace to connect about the mission in time of war. I think fundamentally what we're seeing right now is an acceleration in an increase in invalid of enquiries for air. I like technologies, Um, and it's very interesting to see where it's coming from. We've always mean position at the sea level with our solutions and our expertise. Now we're getting more and more enquiries coming from board of directors coming from holding companies, saying, What do we do next? Because we've been investing for the last 30 years, 20 years, you name it in every wave of technology. Cloud big data out there, that science a I you name it. And when Kobe hits seal, looks at the warden, say, I don't know who is buying my product where do it, where is my they don't know and it's crazy. So I think, and I think, and I experience right now, Um, what I think's gonna happen is really The boards are gonna look to the CEOs and say, How do we make sure that this doesn't ever happen again on we're going to go back to the basis data management, the people and the computers on How do we work together? The other point I was gonna make is think any project right now that has a chance of bidding through is a project that guarantees and our ally within 3 to 6 month, I think those long tell project I'm gonna implement something that's going to see when it's sayonara in two years. Right now, out of the question. But if you can read, demonstrate that by implementing your technologies, your going to get in our I very quickly and you can explain fundamentally how that's gonna happen, there's gonna be an uptake for this kind of project. So I think there's gonna be a big shakeup in our industry right now. I think of it is gonna act as up as the ignition for rethinking of data structure, vendors dependency. We talked about dependency on China, but he also dependent on very school number of key vendors. And if they don't deliver solutions that allow you to have the visibility, the agility and the intelligence right to take real time decisions and adjust your organization, everything depends on your data. So that did. Architecture er is going to go from nice science experiment. Now we've put, too did our house that that didn't work, that we went and put a data like Did agree that did ocean did a swamp. But it whatever you want, what did they give you when the crisis hit? Not just had some guys somewhere in an office saying We've got the data but that that wasn't pervasive around their organization. It was interested. He didn't allow you to make real time decisions that we've seen that you know, over and over. And I think right now there is a tidal wave of change that's gonna hit, and it's a good thing. I think it's a It's a good thing to reject that part of our industry,

Radu Palamariu:   46:05
right? A Roxanne, a question for you. What other alternatives to layoffs in this period of prices? I think it's a question that that most most companies are considering. I mean, you never wanna lay off your people. So maybe some tips and tricks are those things that have worked for you that

Roxane Desmicht:   46:24
you mean tow, Avoid layoff,

Radu Palamariu:   46:27
destroyed or two to minimize? I mean, I don't know if you can 1% avoided, but to minimize. So are there any other ways in which you can cut cost apart from firing people? Basically

Roxane Desmicht:   46:37
of Thank you so much, I have

Radu Palamariu:   46:44
you all the easy questions.

Roxane Desmicht:   46:47
Um, I think it depends on, um, how desperate it's Ah, the company is And how short term measure I was. What is the importance off short term measures? Because when you lay off, you lose talents. And if again, as I said before, if there is an opportunity for rebounds. And so first we bonds and you end up exactly with the same challenge as, um uh having to re retrain resource retrain people. So I think we should as company we should make sure we don't take Shotem decision which will impact our mid long term. Um, now, in this time of crisis, I think there is against John was in tingle bit tothis on. Ah, looking beyond the Salo thinking off function. So ah, on alternative to minimize layoff, I could sink off his to redeploy, maybe the results in area which might be more pressing at the moment. So Ah, it could be maybe, just maybe something a bit out of the blue. But I think there is a lot of pressure Tuesdays on facility ah on how to manage a premises. And thus if you have some account which maybe are in planning but do not have a full blown ah effort to come to spend on plannings and they could be relocated to help out in another domain, I think this is where, as organization, we have to be very unified to try Toe makes the best fit because there are some domain off activity which are maybe on the ah other stuff and Sangamon, which might be over stuff. And first looking at rebalancing could be, ah, alternative to minimize Lee off. Another aspect could be also to ah convince. I mean to debate and convince the management off the necessity to to plan for the future. So I think John was also talking about this to say, moving forward, we might need teams, which are ah more focused on business, continue to plan, not only own writing a plan, but on exercising the plan. Revisiting the plan, reassessing Reese more regularly looking at the supplier bays. Looking at whether there is a weak point is a chain, and those are maybe new job, which might, ah, emerge out off this cove. It crisis. Um, but of course, this solution only works. If there is, it's not a cash flow problem. It's really more, um, having too many results based on the current DeMent.

Radu Palamariu:   49:41
Mm. Run John. I want also to ask you the same question. I mean, you mentioned those of the example from from South. If you have clients all over the world, do you have some some other, you know, maybe options? Or where could companies look at and how they could They think of things to minimise? That's a impact in terms of the workforce.

Dr. John Gattorna:   50:06
Look, I think it's a lot to do with you changing that met. Maybe it's about it. We're getting down to job sharing. We we are trying to hang onto our star but reducing the number of days that they're working eyes. One possibility um, I think that the the other possibility is to really have a look at bolstering our internal control towers. I know a number of companies have got their own networks. Um, there are four p holes that offer that is a shared structure. I I think we could start building up that facility. I take the view and it's a maybe a bit of a biased view. But any company today that doesn't have its own internal network optimization, modeling capability and data and lyrics capability are already up going up the door, let alone covert coming home. So I think we've got to start to build up their inside big companies networks of these controlled house that may employ 30 or 40 people. Um, with screens, the data analytics that goes with it in the modeling, it goes with it all. Help are the heart of the era. Um uh, technology and making decisions on the day to day basis, but also building models that what I would call are ready to run such that when you do have a disaster, you've got something to actually run a scenario. We had people calling us more of the world saying they've got products in a lot of Trish product going from places like South Africa into Europe. Um, and you know, they've got no idea when when they when they harvest their their stone fruit and that blueberries and everything else just what the market looks like it Europe for those products. If they had a network model, they'd be able to run different scenarios and look at the various limits and then take a view of what they think is the one that they should run with. We don't have those capabilities of moment on. We just can't use spreadsheets and think so. I think there's some more clever jobs that we could start moving people into in the in the short time to also this smart can capability that I'm talking about for the organizations.

Radu Palamariu:   52:18
Yeah, super great. Well, I slowly wind it down here because we're close to the one hour mark. I want to thank everybody for the questions. We had many more questions, actually, and we're I just want to reassure all the participants that we were storied and we will do some more webinars. I also want to say that we have done a podcast with with John in the past. So if you want to hear a little bit more about about some of the models and and his thoughts, you can listen to the podcast is called Leaders in Supply Chain. We've also done one with rock sense. You can find both John and Roxanne. We need to do one with Fred your next. Also, I want to encourage you to buy Jones book, if you because he has denied dynamic supply chains. I read that, and I'm not a supply chain specialist. I read that in a two days or something so that it's amazing. And and you've, Ah, you've launched the new one ride that transforming supply chain just this year and do check out era and their capabilities off course. And thanks a lot for making the time to join us all today.

Frederic Laluyaux:   53:22
Thanks a lot. These guys. Thank you. I have a great day, I think. Thanks for radio