Connecting Logistics and Distribution Operations to Logistics Orchestration Networks

Guy Courtin: Thanks everybody for having me. The next 30 minutes, we're going to talk a little bit about digitization, logistics, distribution, but really it's a story about digital transformation.

We've heard it from this morning. We've heard it through this great presentation before, but it is about how digital is transforming the world and how it's impacting our supply chains and more precisely your logistics.

Before we start, and I think we heard some of this this morning, but this is all about disruption. Always good to level set. This is from the Miriam Webster dictionary. Disruption is as defined a disturbance or problems that interrupt an event, activity or process. That's what's happening.

Though we've been living this now, not just for this year, this past five years, 10 years. Obviously, the pandemic is one of the biggest disruptions we've lived, but this is what digital has been doing within our business.

When we think about disruption, the pace of which it's happened, this to some degree encapsulates it. When two brothers in North Carolina, United States decided to fly between that timeframe of invention of human flight to man landing on the moon is 66 years.

You might say, wait a minute, that's a long time, but when you think about it from taking off for six seconds to actually putting someone on the moon in 66 years is pretty fast. I have a family member who witnessed this in his lifetime. Think about it. He saw everything from the steam engine to someone flying to all of a sudden someone on the moon.

Think of that speed, that pace of which things are changing, that is only accelerating today because of digital. This reinforces this, and I think I heard some this morning talk about this, but McKinsey says by 2027, 75 percent of the companies currently quoted on the S&P 500 will be gone.

They've gone out of business, they've been acquired. They'll fall out of the S&P 500. Think about the speed of which these businesses are going out, or moving on. Just a quick trivia question. Back in 2000, who was the number one cell phone manufacturer? Nokia and Ericsson, correct. Where are they today?

Blackberry was just starting, RIM was just creeping in, all of a sudden now, how many of you guys carry a Nokia or a Ericsson phone? No one, I didn't think so. If we look at this, the S&P 500 average lifespan. If you're in the S&P 500 in 1958, your company was 61 years old on average.

In 1980, 25 years. Today, 18 years. Any of you guys from United States? I'll use an American example here. For those of you who aren't, I apologize. If you are in America, if you're an American citizen in 1958, you qualify for AARP, that's for retired people.

If you are now in the S&P 500 United States, you've been able to drive for two years. You can vote this year, but you're three years removed from being able to legally buy alcohol. The pace of change because of digital is moving at a breakneck pace. Part of it is because of this, industry 4.

It's a great book called "Shaping the Fourth Industrial Revolution" by Klaus Schwab from 2018. Many of us know these other industrial revolutions, of course, industry 1. mechanization, steam power.

All of a sudden we were able to bring in looms, revolutionize the way we created clothing, etc. Industry 2., mass production, Henry Ford, the assembly line. All of a sudden now we're able to do things in a way, in a mass production. Industry 3., automation, computer chips. All of a sudden now we brought automation technology, computers into the world.

Now, industry 4.. A lot of what was talked about this morning about these platforms, etc., is exactly this. It is the growth of connectivity amongst networks, amongst devices, amongst all of us, amongst our supply chain. This is where we are today. Keep that in mind as we go through this.

By the way, disruption, you guys know Radio Shack. I know you Americans do. RadioShack, for those of you who don't know, was the electronic superstore in the United States. You needed anything, you went to RadioShack. This is a flyer from the '90s from RadioShack, it was a President's Day sale.

All of this you now carry in your pocket. Computer, phone, camcorder, speakers, answering machine. This is all in your pocket and you can't see it. I apologize, I should have blown it up. On the bottom here, it says, "Check your local phone book for the Locust RadioShack."

When have you guys seen a phone book recently? I have a 17-year-old kid, I try to show him what a phone book was. He was like, "What the hell is this, dad?" I was like, "Back in the day, we would open this and look for stuff and call for a hairdresser or whatever." He was like, "No, that doesn't make any sense."

Again, disruption. RadioShack out of business now. All of this in your pocket, you carry all of this every day. You carry a stupid computer in your pocket, disruption is happening. What are some of the big trends that I'm seeing in terms of disruption, but the need for more connectivity.

This connectivity of networks. First one, consumerization. Now you might tell me, you know what, I work in B2B, I don't care about the consumer. Wait a minute, all of us here in this room are consumers. When you go to the work on Monday, do you accept, reacting or working in a way that you don't as a consumer?

Do you accept going to a green screen? Do you not accept being able to go to an app to have things delivered to you quickly? I'll give you an example. I used to be an industry analyst a long time ago. I remember, I went to a procurement event and I was talking to the chief procurement officer at a bank.

She told me, said, listen, when I order flowers for my bank branches, toilet paper, paper desks, I don't want a green screen. I want a screen like Amazon. I want to see choice. I want to see people giving ratings. I want to see prices, I want to see understanding of when things will be delivered.

Consumerization. I don't care what industry you're in, the people you work with are impacted by how they act on the weekends when they go to Amazon or eBay or any of that. Two is regulation.

Governments, we know what's going on in United States, DSCSA. All of a sudden we as an industry, the government is telling us we need to communicate better to track and trace products. That's a big driver. If the government says, you got to do this, otherwise you get a penalty, it's pretty a big driver.

Competition. If your competitor has better connectivity with his or her supplier and his or her customer, how can you compete with that if you can't meet that. Competition and disruption. I know disruption in a way in supply chain, I would say is an overused term, because all of us in supply chain have always dealt with disruption, whether it's small or big.

Whether a pandemic like COVID, whether we're seeing right now in United States potential strike of the East Coast dock workers, if there's a fire in one of your warehouses. Disruptions are part of our daily lives as supply chain professionals.

What's happening is that we need to react faster. We need to react quicker. Before we just talked about, be able to react to things, not necessarily anticipate because we can't anticipate everything. Can I anticipate a funny story. How many AI engines anticipated COVID? I'll tell you the answer,

Oh my God, but it's AI, it's supposed to know the future, but who can react faster? That's part of the disruption part. Those are the four for me big buckets when we talk about greater connectivity. Greater connectivity for supply chain, greater connectivity for your fulfillment engines.

Because at the end of the day, I think this is true, and I wish I come up with this, but brands or your business doesn't compete. It's your supply chain. We could take the term supply chain out and say your network.

Like we talked about this morning from main stage, we heard the network of networks. Your network is what makes you competitive. Not you and your business, it is your partnerships, your network. If we look at this, you're only as strong as your supply chain. Pull some of these articles. A lot of stories that came out.

I'll tell you guys another funny story about supply chain. The pandemic is the first time my mother actually called me and said, "I know what you do now."

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Guy Courtin: She'd gone to the grocery store and she couldn't find stuff on the shelf. She was like, "Oh, that's what supply chain does." I'm like, "That's right mom. That's what supply chain does."

When you think about supply chain, we are a network and you are only as strong as your network. Any of you guys remember a woman named Kathie Lee Gifford? She was an American, I would say a B star. I see you're nodding your head. Would you agree with me?

She was sort of a B-list star, but she had a very popular morning show. She was married to a former NFL player. The story I'm going to tell you guys is about her supply chain. She was successful, had like I said, a good show. She had a line of clothing. Kathie Lee Gifford clothing. He was doing OK.

Someone discovered or found out that someone in her supply chain was using child labor. Guess what happened? News came out. People were like, "Are you kidding me?" She was done. Her clothing line went under.

Unfortunately, I guarantee you that that supplier just turned around and found someone else to use their business. They didn't suffer. Kathie Lee Gifford suffered. Her brand suffered because her supply chain was broken. The network was broken. We didn't have visibility into the network to be able to deal with this.

I want you guys to think about that as we go through this. The reality is this, this is a score model. I do think it's a great model. Certainly I'm not saying we should, but supply chains are not linear. The notion of a chain means that one links to the other until you get to the end point, but we know it's not linear.

We've got different suppliers, we've got different logistics, different warehousing, 3PLs, etc. It is really a matrix. We're a network. Guess what ties all this together? Digital. When I say digital, I mean data. This is what ties in your network is that flow of data, that digitization. The revolution we're going through is what empowers your supply chain, your network.

When we think about this, we always have to give some statistics, but I thought some of this is interesting. Connectivity is also a digital journey. It's not an end point. We don't get there and say, "Yeah, we're done. We've digitized." Part of it is why.

40.7 percent of modern companies believe that data analytics will be one of the key technologies for supply chain management in the next two years. I think we've been hearing this already today. 28 percent of supply chain leaders say that analyzing data from multiple systems for SCM is key benefits of advanced analytics. Again, the network.

I would say that 30 percent is low because the other 70 percent probably doesn't realize they have to go outside their walls to get this data. 81 percent of supply chain managers report that data analytics will be crucial when it comes to reducing costs, that cost-reduction side.

Now I have another presentation actually where I talk about there's also a cost gain opportunity. Meaning as you get more visibility, more digitization, what market share can you capture because of it? What opportunities can you capture.

You talked about earlier reacting. Do you guys remember the Razer phone? That was super hot, and everybody loved it. My girlfriend at the time had a pink one and it was the hottest. I was like, "OK."

Motorola was like, "Oh, we're going to sell this many," they sold like 10 times more. What did Motorola do? They upped production. Do you remember what year that was? 2007. What happened in June of 2007? Someone named Steve Jobs stood up in Cupertino and took out this thing called the iPhone, Razer.

The ability to react and to look at signals and to understand what's happening is crucial. That data, that ability, ethics, we were talking about this morning, the real time information or the near real time.

Now, I would argue that it has to be a collaboration between the machine and the human. There has to be an aspect of human looking at this. I personally, maybe I'm too old. I don't believe the machines will be able to do everything without human intervention.

Speaking of logistics, I heard a really interesting discussion from MIT the other day who said, "We're trying to do more data when it comes to logistics, how to do last-mile fulfillment." It's really important. What we cannot replicate is the knowledge the drivers have.

Because the driver might know, "Hey, on Tuesday at 4:00, I can park in this spot and deliver my packages, but on Thursday at 4:00, there's going to be kids coming out of soccer practice, I can't park there. I'm going to reroute my stuff." Now the machine will tell you, "No, you got to do it this way."

The driver's innate knowledge is something we can't necessarily replicate. Again, human and machine. You guys know Uber, of course. Uber has a very interesting play. Now this is their pivot during the pandemic, and I would argue, and we'll get to it in a second. They have the three key elements to be able to pivot.

They had software, they had hardware, they had the platform. Within all that, they had data. If you look at these numbers, 2019 mobility, which is their ride-sharing service, was 49.7 billion. Delivery was only 14.5 billion.

Pandemic hits, granted, we're not going for rides because we're all stuck at home, but we're ordering more food. They were able to pivot. Now, 2021 delivery is about 30 percent more than mobility. That number keeps growing. Uber demonstrate through digitization the ability to pivot their business because of a disruption. Very big one, but a disruption nonetheless. Keep that in mind.

Now this is interesting. I think we talked about the control tower, we talked about control tower, but this again reinforces this. Now, we did not collaborate on our presentation, so this.

By 2026, 80 percent of global and large enterprises will have adopted the logistics control tower as their opening framework of choice to improve shipment visibility and performance analytics. Absolutely. Now, caution, the word control tower gets thrown around a lot. I'm a software vendor. I will freely admit it's marketing.

Push us vendors when we say control tower, what does it really mean? The concept makes a lot of sense, but you got to understand what does it mean for your business? Is it transportation? Is it warehousing? Is it logistics? Is it ocean bound? Is it road? Is it last mile?

Push your technology vendor to clearly define this when we tell you this beautiful story about a control tower. There to me, I mentioned earlier with Uber when it comes to this, I would say there are three legs to this stool.

Three legs to this digitization stool for fulfillment, for your supply chain, hardware, software, and the platform. Underlying all this, of course, is data. When I talk about hardware, there's more and more connectivity we're seeing out there, IoT. All of a sudden now we're connecting everything.

You guys remember when Walmart said everybody's got to do RFID and it completely crashed and burned. Why? It was too expensive. RFID chips were too much, it didn't make sense.

I remember I was talking at the time to Castro and they said, "They want us to put our RFID chips on motor oil. We can't read through the oil. It doesn't make sense." Walmart said, "Oh, you got to do it or else you can't sell in my store."

Now, we are seeing IoT where the prices come down, the readers have come down, it's becoming more accessible. Advanced cameras. This is I think really interesting. I don't know how many of you dealt in this, but I've seen a lot, especially in the warehouse in other parts of logistics.

Using camera technology to do things. Everything from basic cycle counting to ensuring that the pack, that how you're pick packing is appropriate, to how you're building a cube is appropriate, to quality control.

Think about this too. Not only is it QA-ing a lot of stuff, how much data is that producing? How much digital exhaust is that creating to put into your network?

Robotics, we talked about it, we've heard a lot. Robotics from a task is very important. We're seeing more and more of it.
Just like the cameras, robotics are creating a tremendous amount of data. What can you do with that information?

How can you put that into your network? We've got scanners handheld, etc., and then my favorite. I put UGG because...hopefully none of you guys have used Google Glass.

If you have, don't raise your hands because what I'm going to say next is going to piss you off. I remember the one time I saw someone wear Google Glass, I was in Paris, I was at Charles De Gaulle. I'm walking in an elevator and this guy comes out with his Google Glass and I'm like, "You are a glass hole."

I didn't say it to him, but that's what I thought, because I was like, "Why do you need this?" I don't need...but in the supply chain space, this actually is getting more usage. Why? Because there is a use case for this. The reason I bring it up, it's a wearable.
It's again, it is creating a tremendous amount of digital exhaust of data that you could potentially leverage in your supply chain. There's a whole host of others, but hardware, connected devices, that's one leg of the stool. The second one is software. I know it's a word salad. TMS, WMS, WES, WCS, labor, LMS, yada, yada, yada.

I'm a WMS vendor, so I will eat my own dog food, but it's a salad which is healthy. What I mean by that is, hardware does nothing without the software. Software is the brains, hardware is the labor to some degree. Before I came to Texas, I actually worked for a robotics company.

I remember my CEO said, "Listen, our robots are just plastic and steel and glass. They do nothing without the software telling you what to do." We need that layer of software, we need that layer, whether it's the system of record, whether it's a system differentiation, you need that software layer.

Now, the first two, I would say are fairly mature. The third one, which is a lot of the conversations we've been having is the platforms. Now, great presentation this morning. It's a keynote about Mint and the platform, I think it's great.

I'm going to say there's a lot of platforms out there to think about, and they don't always come from the tech vendors. That's why I put Amazon and Walmart. Amazon has a huge platform. Now, whether you want to be a part of it, another story, but so does Walmart, so does Target, so does CVS.

A lot of these businesses are creating platforms of partners. Take advantage of it. Are you part of that? Do you need to be part of it? Are you exchanging information? I mentioned earlier about the control tower. From the platform perspective, there's also, of course, Mint, but things like GT Nexus, one network.

Platforms for like ocean bound. Platforms to look into your suppliers. There are networks and networks, and there are other networks. What you need to do is to look, which ones do you need to be part of? Which ones can you take advantage of? Which ones make your business better. When you think about those three legs of stool, back to the Uber example, they have the hardware.

Everybody's got a cell phone with the Uber app, we're giving them a ton of data. We're creating a physical platform for them. Their drivers have the app, they have the software, they have the scheduling software, the routing software, the payment software, etc., and they've created the platform.

All of us who have Uber on our phones and all the drivers have created this platform. They have those three legs of stool from the digital perspective to be able to pivot.

When we look at this, this is really interesting from Deloitte. It's towards a more connected community, and you can see actively using or plan to use in the future. These can all be broken down really into one of those three buckets. You've got things like data-sharing platforms, that's a platform. Part of connectivity via cloud, platform and software. IoT Solutions, hardware.

When you think about it, you can play or you need to focus on these three different buckets when you're starting to build or go down your digital journey to again, for your supply chain.

What happens with this? Well, this is from PwC. I think this is really interesting. That shows that as you strive for greater connectivity, you become a digital champion. I don't think you get a trophy or anything, but you can call yourself a digital champion.

What that means is that you are harnessing the power of this new revolution. Maybe it's not that new, but it's one that you need to be on. Hold on. Again, I didn't prepare this with anybody else, but change management.

It's been said from main stages, been said before my presentation. This is absolutely vital when you think about this, is the change management. I'm going to sound really corny, but it's all about people at the end of day.

I heard someone say this the other day at a show. He's a CEO of a Fortune 50 company. He said, the number one asset you have is your people. Number two is your data, but number one is your people. Your people are going to be impacted by this.

I'll give you guys a funny story. Speaking of software, I remember I was trying to sell WMS to a company that clearly needed a WMS system. They had a really old WMS, it wasn't doing what it wanted to do and talking about change management.

We're trying to sell to the gentleman and he said, "Listen, I know your stuff's great. Love to buy it. I'm retiring in three years. If I put this in and it breaks, I lose my pension is going to fire me. When my replacement comes, you can sell it to them, but I'm not touching it, even though I know it's good and I need it."

It's like, "I got three more years and I get my pension so I'm not touching it." Change management. It sounds so simple, who wants change? Love this, who wants to change? No one, but change is hard. This is interesting from garner challenges when executing a supply chain transformation.

Number one, resistance to change from decision stakeholders at 38 percent. No surprise, but there are benefits. If you look at the top two, top benefits from supply chain transformation, improving resilience of supply chain, significantly enhancing stakeholder engagement. This is hard.

Now, especially when we talk about your supply chain, because now you're also talking of a network, it's outside your four walls. You're talking about your logistic providers. You're talking about 3PL. You're talking about your warehousing, you're talking about execution.

Now you're outside of your own four walls. All right. What to do tomorrow? Probably Monday, I'm assuming tomorrow your guys are going to be here and then the weekend, so I don't expect you guys.

One of the things I always try to do is, you guys come, you spend time here, you go home, your boss says, "Hey, how was Barcelona? Did you go see America's Cup? Did you go to the beach to get some good paella?"

You want to at least be able to say, "Yeah, but I also brought some ideas back." What to do tomorrow, Monday. First and foremost, and I think this has been talked a lot, which is great since this morning, is your data, do a data audit.

What is your data hygiene? What is your data governance? How clean is your data? Is your data usable? These might seem trivial, but they're not. I'll give you another example. I worked for a company where we ingested point-of-sale data from retailers and then sold them back to CPGs to do things like planning, to do things like forecasting.

A very large American consumer pharmacy with three letters out of Rhode Island, but I won't name who they are. They would literally send us spreadsheets that were not formatted of all of their data. We would look at and be like, "What is this?" We'd have to clean it.

Then we'd literally sometimes call them and say, "Hey, on this date at this store, we saw a huge spike in sales. What happened?" "I don't know, it must have been a sale."

This is a Fortune 20 company. Again, don't take this for granted. Map your network with data in mind. Who are all your partners? Now, we're talking about supply chain, we're talking about logistics distribution, but who are your suppliers? Who are your supplier suppliers? Who are your customers? Who are your customer's customers?

Your B2B, there's a C somewhere there. At some point it gets to the consumer. Figure that out, map it with the data in mind. Identify your logistics and fulfillment. I think this is important too. Like, you're not all Amazon, nor should you be. Do you need to deliver stuff in two hours? Probably not.

Is that your business? Are you doing pallets? Are you doing eaches? What is your fulfillment network look like? Are you relying on 3PLs? Are you doing your own distribution? Understand what that looks like, because that also understands back to the first one, what does your network look like?

Work with your tech stack partners. I am a software person, so I apologize. What I mean by work with us is, work with the trace links, work with us, work with your tech stack to understand what can they deliver, what do they have from either the hardware, the software, the platform that you can leverage.

Don't be afraid of asking the hard questions of us. Push your tech stack. Also, there are no dumb questions. What I mean by that is a lot of tech stack guys like myself, we're going to throw all kinds of terms at you. Don't even get me starting AI stuff.

Oh, well if you're not doing generative AI, then you're an idiot. What does that mean? What are you going to do? Push your tech stack. We are your partners, but you also need to push us when it comes to understanding exactly how we help you create this digital platform in your supply chain.

Again, I know broken record, prepare for change management. This is going to change your business fundamentally. It might only change it at one level. It might just change in the warehouse or in your transportation node, on your planning engine, but it is going to change your business.

There's no such thing as too minor of change management because you don't know how it's going to...the ripple effect will have on the rest of your business. Part of that too is set the right expectations up and down with your leadership, with your own peers and then with people that work for you.

The expectation setting is absolutely crucial when it comes to this. First and foremost, technology is not a panacea, it's a tool. If you don't use it properly, it's just going to sit there. I can give you the best hammer in the world, but if I don't teach you how to hammer a nail, it's just going to sit there.

That's part of the expectation setting that you must do with leadership. With that, I thank you. Please reach out to me if you've any questions, and I know might have the questions now, but happy to discuss further. Of course if you need the slides or anything, I'm sure we can send them to you.

Henry: We are at time, but I do want to offer the opportunity for questions from the audience. Good.

Antonio Tramontano: Hi, this is Antonio Tramontano from Genpact. I think you just said something along the line, but what I really would have added to your last slide is education, because...

Guy Courtin: I'm sorry, is what?

Antonio: Education.

Guy Courtin: Education. Yes. Absolutely.

Antonio: Because I see technology growing and becoming very powerful. The ability of using it is not growing at the same speed. How would you tackle this element?

Guy Courtin: Great point. The notion of educating, and I think that's where, going back to working with your tech stack. Part of that is responsibility on the tech vendors to also help educate the businesses on what the tool is that we're providing, what you can do with it and what you can't do with it.

That's the hard part because a lot of times the tech vendors are, "We can do everything. We've got the greatest thing ever." That's something that as an industry, when I say industry as a tech vendor, we need to do a better job being open and honest with our customers of what is it this tool can do and what can you expect out of it?

I know it's not about AI, but if I look at the problem I have with AI today is that we're promising a lot of things that we're not ready to deliver yet with AI. But because it's the hot thing and because we all have to be on the AI train, we want to tell that.

That's why I go back to, from a user perspective, ask the hard questions because that helps you get educated. It has to be a two-way street. Us as technology vendors have to be more honest with our customers and educate, and the users have to ask the hard questions and look for the answers.

There might not be an answer you like, but that's OK, because the worst thing that can happen which we've seen a million times is, I'm going to sell you this great widget, and then you take it home and you're like, "It doesn't do 90 percent of what you told me it would do, so I'm just going to put it over here and I'm not going to use it."

Then we've all lost. It's hard to answer the right way in 20 seconds, but it's part of the journey that we all as an industry have to take together.

Henry: Would you mind going back to the Gartner slide? I have a question for you.

Guy Courtin: Which one?

Henry: This one, sorry, the last one. The fourth point down, improving customer experience and customer service.

When we think about collaboration and we think about Mint, and particularly the logistics orchestration that I'm responsible for, I think about how can Mint help a logistics service provider, a 3PL, a 4PL provide better customer service to their customers, either the drug manufacturers or perhaps on the fulfillment side, orders shipped down to the pharmacy, the hospital or the clinic.

Today we know that many large 3PLs have invested heavily in their own integration with their main customers. That's great, we're not here to displace that and it's likely working quite well and perhaps something they might not want to touch.

We also know from speaking with industry executives that there's a whole segment of the industry that is still operating very manually, whether that's the mid-market or emerging markets or new product launches.

It's interesting to me that we talk about supply chain collaboration and this focus on the customer experience. I'm wondering if maybe you could elaborate on that just a little bit.

Guy Courtin: Yeah, absolutely. Part of, we think about logistics networks. To your point, Henry, if you look at like the trucking industry, 3PLs. There's a plethora of 3PLs that have a handful of trucks. They're not the big Sivas of the world or [indecipherable].

How do you connect in with them and how do you get that data? Because then to your point, if I'm providing a service and I don't have visibility into how my customer's customers are reacting, how can I anticipate what they might need? How can I anticipate if there's an outage?

How can I anticipate if there's a disruption? Because at the end of the day, it's all about data. It's all about if I can't manage what I can measure. The further down the stack, the further away I get from that end customer.

Analogy. You guys played the beer game. I don't mean the Friday night going to the bar and drinking a bunch of beers, but the supply chain beer game. The biggest issue with that is what? It's visibility, it's communication.

If I don't know what's happening up and down the network, how can I anticipate what my direct customer needs? From the logistics point, that's exactly right. How can I as a logistics provider, if I'm providing a pharmaceutical company distribution, but I can't see that the pharmacy or the pharmaceutical's demand is spiking in a certain region, then I can't allocate my resources properly.

Now, maybe I still have to wait for the order to come down, but at least I can anticipate. We see this in retail all the time. It's scary at times. Amazon, Mercado Libre, all these big companies are anticipating where things will happen so that they can better service their customer, us.

It goes back to that. For logistics distribution players, the challenge for them is what? They deal in physical. I got to physically move something. The sooner I know where I need to move that, the better I can anticipate. That's why I think that platform, that network, that sharing information is vital for those guys.

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