Aristotle said it best: the whole is greater than the sum of its parts. And nowhere is that truer than in supply chain, which now enjoys the global spotlight for reasons less than desirable. But not to fear! In this episode, Kevin L. Jackson is bringing in the experts — Thulium CEO Tamara McCleary and Tompkins Ventures Founder Jim Tompkins — to examine the current state of the supply chain, the promise of AI for handling disruption, the critical importance of communication (along with plans B, C, &D) and more.

Intro/Outro (00:01):

Welcome to Digital Transformers. The show that connects you with what you need to build, manage, and operate your digital supply chain. Join your host in a timely discussion on new and future business models with industry leading executives. The show will reveal global customer expectations, real world employment challenges, and the value of advanced business technologies, like artificial intelligence, blockchain, and robotic process engineering. And, now, we bring you Digital Transformers.

Kevin L. Jackson (00:41):

Hello everyone. This is Kevin L. Jackson, and welcome to the AT&T Business Talks Chat on Supply Chain and Manufacturing. My name is Kevin L. Jackson, and I’m the host of Digital Transformers on Supply Chain Now, and I will serve as the moderator for today’s fireside check.

Kevin L. Jackson (01:04):

In product manufacturing, the supply chain facilitates the transfer and transformation of raw materials into finished products. From there, the manufacturer transports and distributes the products to a retailer or directly to a consumer. But over the past couple of years, this normally invisible component of just about every business has become front and center. I’m sure you remember the toilet paper problems. So, in this BizTalks Chat, I have the pleasure of inviting two leading experts to give us their view on the state of supply chain today and what the future holds as the world recovers from the pandemic. First, I’d like to invite Tamara McCleary, the CEO and Founder of Thulium to introduce herself.

Tamara McCleary (02:00):

Well, hello everyone. I’m so excited to have this chat with all of you and thank you for joining. Thulium is a global social media marketing agency. But, currently, I’m trying to put my money where my mouth is and I’m upskilling myself. Times aren’t changing, right? So, I’m currently a fulltime graduate student at Harvard and my focus there in my graduate studies is Science Technology and the Global Economy.

Kevin L. Jackson (02:26):

Wow. That’s a lot. So, thank you, Tamara. Now, I would like to ask Dr. Tompkins, the Chairman and Founder of Tompkins Venture to introduce himself.

James Tompkins (02:38):

Well, thank you, Kevin. And it’s my pleasure to be here as well. And, Tamara, it’s great to see you. And my background, I guess I began my background at Purdue University, where I got my Bachelors, Masters, and PhD in Industrial Engineering with a focus – back then we didn’t have the word supply chain, we called it industrial distribution. I left Purdue and went to NC State as an assistant professor teaching facilities, planning, material handling, transportation, distribution, and logistics. And at the same time, I started a consulting company as this kind of a sideline. And three years later, my wife pointed out to me that I was making six times more money on my side time job as opposed to my full-time job. And so, then I decided – my wife did not decide this. This is my story – to leave the university and make my life’s work, Tompkins International.

James Tompkins (03:31):

We did that. We grew the firm. We grew internationally. We had several hundred people. We’re very, very successful. And then, COVID hit. When COVID hit, I decided I wanted to take a new path and leave consulting. And I went into the business that today we call Tompkins Ventures. Where, at Tompkins Ventures, we focus in on five critical aspects that you need for companies to be successful. We focus on leadership. We focus on capital. We look at facilities. We look at technology and logistics.

James Tompkins (04:05):

Across my career, I’ve written 30 books. I am writing number 31 as we speak. I was working on it this morning. And I’ve given 2,000 talks, wrote 1,000 papers, been the president of three professional societies, and excited about what’s going on in supply chain because it’s a tremendous time for learning. So, looking very much forward to this discussion and learning from Tamara and what Kevin leads us on the path. So, let’s get it on, Kevin.

Kevin L. Jackson (04:34):

No. Great. Well, thank you very much. It sounds like you’re a professional in this area. I’ll tell you, I’m a technologist and I know Tamara is a scientist, so glad to have you with us.

James Tompkins (04:49):

Pleased to be here.

Kevin L. Jackson (04:49):

So, Jim, [inaudible] this thing off with an overview of the supply chain. I mean, you seem like the perfect person to give us a state of the union, so to speak, because we know there’s been substantial challenges over the last 24 months. So, how are we doing?

James Tompkins (05:06):

Well, I tell you, looking at the goal of supply chain, what we see our goal is to synchronize supply to demand. That’s our job. To do that, we have six mega processes. The six mega processes are plan, buy, make, move, store, and sell. And so, the question is how can we synchronize supply to demand while doing plan, buy, make, move, store, and sell? What we saw in January of 2020, while all the Chinese folks were back at their home where they grew – in China, you go to where you were born during Chinese New Year – during Chinese New Year, COVID hit. And what it did, it caused the Chinese country to close the travel. No one could travel. Everyone had stayed at home. And so, we went, not two weeks without supply from China, but it actually turned out to be eight weeks before we had the factory of the world working again.

James Tompkins (06:08):

And so, what they did is they totally disrupted the supply coming from China. And so, when you totally disrupt the supply, you’re not going to have the ability to synchronize supply to demand because you don’t know where the supply is. When they started to export product again, they also exported something else. They exported COVID-19. They exported the product on ships. They exported COVID-19 on air. And so, it traveled very quickly. And what occurred around the world is the virus occurred before the parts did. When the virus occurred, the world had a shutdown. And what that resulted in is a major change in the demand.

James Tompkins (06:47):

And so, here we are in March of 2020, we have no control of supply. We have no control of demand. And we have lead times which are the just going all over the place. There’s no sanity, no truth there, whatsoever. And so, what happened is the supply chain of the world ceased to operate. We were not able to synchronize supply and demand. Now, the interesting thing is the trend that we saw really come to the forefront in March and April of 2020, actually started back in 2019. In June of 2019, I made a YouTube video that talked about the level of disruptions were occurring more and more and more frequently. And that we needed to plan a supply chain that was more resilient because those disruptions were causing havoc in what we were doing.

James Tompkins (07:40):

If you look at 2020, COVID was a terrible, terrible, terrible disease. It still is. But in addition, we had a world record on wildfires, world record on hurricanes, world record on bankruptcies, on geopolitical crises. We had 450 billion locusts in Africa. Can you imagine 450 grasshoppers running around? I mean my goodness sakes, they ate everything alive. We had exploding ports in Lebanon. We had the Suez Canal blocked by an Ever Green ship. Interesting, last week, what happened? An Ever Green ship got stuck in Baltimore. And so, now, we have a disruption there as well.

James Tompkins (08:21):

If we look into today’s world, the Russian invasion, the impact that has had of the Ukraine, and it’s a terrible situation, not only from the human aspect, which of course is number one, but number two, from a supply chain point of view. If you look at the Ukraine-Russian impact, what we’re talking about is wheat, barley, corn, potatoes, aluminum, iron, nickel, plutonium, titanium, mercury, manganese, uranium, ammonia, and neon that are totally, totally disrupted. And this has major impacts around the world. And so, what we have is we’re living today, what was defined in the late 1980s by the U.S. Army War College as VUCA. VUCA stands for volatility, uncertainty, complexity, and ambiguity.

James Tompkins (09:11):

So, what we have in the supply chain today is VUCA. And where we are living right now is the new normal is disruptions. Disruptions are going to continue. Because of the Ukrainian crisis, we don’t really look at a lot of other things that are going on in the world. But are you aware of the fact that the record rainstorms in Australia and Australia is in major problem? Are we aware of the fact that today in Germany, Volkswagen, Mercedes-Benz, and BMW are not producing cars? Do you know why they’re not producing cars? Because all the wiring harnesses that make those cars come from the Ukraine. And so, what they had was a supply chain that really, really was not functioning and, therefore, they can’t produce automobiles.

James Tompkins (09:56):

The stay at home demands that were brought about by COVID resulting in a huge shift in buying in stores, from buying online. We’re not ready for that. The fact of the matter is, to sell a million dollars of product online takes four times the labor and three times the space than it does to sell a million dollars in a store. And so, it’s having a major impact on how we perform logistics within the supply chain to make things happen.

James Tompkins (10:29):

And so, where we are globally, what’s the state of the art of supply chain today? It is broken. It doesn’t work. And, in fact, I believe there’s aspects of supply chain that are obsolete, which really kind of makes me mad, because I spent 40 years of my life learning supply chain and now a lot of that is no longer relevant. And so, what we need to do is realize the future of supply chain is not like the past. The future is broken and we need to take real strong action.

Kevin L. Jackson (10:59):

Wow, Jim. I’m scared. It sounds like, you know, issues of biblical proportions. I mean locust? Please.

James Tompkins (11:09):

I mean, it is beyond biblical. I mean, where we are right now is we don’t have the ability to allow commerce to function because of the supply chain. It’s a total mess.

Kevin L. Jackson (11:24):

But it sounds like it’s a lot more than just supply chain. So, Tamara, it seems like it’s impossible to address, but I know you’ve been doing a lot of work with companies on how to address some of these issues, I think. Do you have anything good to say about how companies have risen to the occasion by delivering a supply chain excellence? Was it even possible?

Tamara McCleary (11:59):

Yeah. Absolutely. But first of all, I got to say that, Jim, what a way to catapult us out into this really, really critical conversation. Because everything that Jim said is true. And, in fact, Jim you’ve touched upon some things that I was definitely going to speak to, so thanks for setting that up. And just for all of you joining us, Jim, and I didn’t talk beforehand. We just spoke like that. But the check is in the mail, Jim.

Tamara McCleary (12:26):

But, actually, what’s really interesting to me is that, what I have been studying and what’s really critical for the conversation that we’re having today, is, I am doing a supply chain logistics and management part of my curriculum. And I’m studying underneath Mark Fig, who’s just a supply chain genius. I’m working with probably every household brand name you can think of. And so, in exploring these issues that Jim absolutely put before us, is that, what we did to set us up for these problems – besides the apocalyptic, cataclysmic events that we don’t have any control over – is the things that we do have control over. How we set ourselves up for a lot of these failure is that it was really, really popular to just think about cost effectiveness and outsourcing a lot of production, a lot of products. And although it can be cheaper to outsource, the problem is, is that, you lose the ability to control what happens in a geopolitical context that we find ourselves in now.

Tamara McCleary (13:36):

So, for a positive note, Kevin, since you asked me for one, I think a use case would be – and they got a lot of flack for this – Tesla got a lot of flack for pulling a lot of their manufacturing in-house. So, you know, they have much more our control of their supply chain because their source materials are in-house. Their tech, their chips are manufactured in-house. Where – Jim brought this up – other auto manufacturers rely on all these outside sources. And so, you know, even these companies are selling products that they don’t even manufacture, including automotive companies that have other companies manufacturing their vehicles for them. Or even just, say, the chip issues that Jim mentioned, think about your seats are manufactured and outsourced out of country and you have lost your supply of seats. How are you going to sell automobiles without seats? And these are things that Tesla does in-house. And so, they have much more control. And I think Elon Musk has been brilliant – hopefully, we talk about this later – how, even in the executive suite, you need to be able to track, and control, and monitor, and communicate to understand where all your inputs are coming from in order to guarantee your outputs. Because when we talk about supply chain, it’s an incredibly complex machine.

Tamara McCleary (15:06):

And the problems that I’m working on academically at school have to do with looking at all of the upstream nodes, as well as those downstream nodes. And, in fact, I don’t know if you guys have ever seen mind maps, but the kinds of models that I’ve been putting together have all of these various nodes along a very complex supply chain. And whether you up-regulate, or down-regulate, and input, or an output completely changes everything along that mode, because without that lack of flow – we say disruption for everything these days – when there really is something cut off or, say, delayed by eight weeks, you have to think of all the downstream effects of that. And I think we don’t think about how that plays into our everyday lives. And we’ve seen that.

Tamara McCleary (16:05):

And, Jim, wouldn’t you agree that supply chain became sexy after COVID when everybody, as to your point, didn’t get their toilet paper? But it’s been there all along. It just wasn’t made sexy until everyone got interested in how it actually affected them. But even today, you go to the grocery store, there’s empty shelves, items aren’t there, there’s supply chain issues. And so, I think that when we look at how Tesla has brought in a lot of things in-house and is not reliant upon everything to be outsourced, although there are initial costs upfront from doing that, you can see how it’s given the company much more control over their manufacturing, production and, ultimately, their sales, and business growth.

Kevin L. Jackson (16:55):

Well, one of the things they always say, when things are working perfectly, you don’t know anything about it. So, I guess the supply chain was okay when it was static or maybe because we didn’t expect as much as we expect now. And in the past, in the supply chain, the big word was just in time. But how can you rely on getting your cabling for the car from Ukraine just in time? So, Jim, with all of these changes and, I guess, dynamic aspects of our society that maybe we haven’t really seen before, what are collar companies responding to this lack of flow across the supply chain? How can they actually shore up this machine when these previously unexperienced issues come up? How did they show it up?

James Tompkins (18:11):

Well, it’s a very complex question, Kevin, but it’s a very good question. And Tamara began with the answer to that. I like to talk about supply chain as something as EERR. The first E is a supply chain of 1991 all the way until 2005, and that, as Tamara said, was all about cost. E was efficiency. How do we take costs out of transportation? How do we take costs out of inventory, just in time inventory? How do we take costs out of going to a low cost manufacturer? And that was the total focus of supply chain was taking cost out.

James Tompkins (18:48):

The second E began in around year 2006 and went all the way until 2020. And that was efficiency – excuse me. The first E was efficiency. The second E is effectiveness. How do we have an impact on customer service? How do we impact our customers in a way that allows them to want to get value from what we’re selling? And so, delivering it to them quicker. Delivering it to them with more options. Delivering them to where they want the product. And so, effectiveness went all the way until 2020. And the supply chain field didn’t change much. The complexity grew. The amount of global aspects grew. But the supply chain didn’t really change much.

James Tompkins (19:31):

And then, what happened is, in 2020, the disaster that Tamara and I discussed already, and that’s when we grew. Tamara called it sexy. I would call it respect. Supply chain was not sexy. Tamara is [inaudible] right. It was kind of boring back those guys over there. In fact, in this very room that I’m sitting right now, right on the other side of this screen, there’s a chair. I remember in March of 2020, my wife came in and sat in that chair. My wife never comes in this office and sits down. She comes in and talks to me. But she never comes in and sits down. And I thought, “Oh, wow. What did I do now? I’ve done something wrong. Did I forget to take the trash out? Did I forget to break down the Amazon boxes? You know, what did I do? Oh, this is not good.”

James Tompkins (20:19):

And then, she smiled and says to me, “Congratulations, Jim.” And I thought, “Oh. Wow. Thank you. What did I do?” And she said, “You are now legitimate.” “You know, mom and dad never told me that I wasn’t legitimate. I thought I’ve always been legitimate. What do you mean?” And she says, “No, no, no. You and I have been married for 51 years. For 51 years, I’ve explained to my friends, to your friends, to our kids, to our grandkids, to everybody, what it is you do, and everyone looks at me with a blank stare. But for the last two weeks on the news, all the time about supply chain, supply chain, supply chain. My good friend, Ruth, called up and says, ‘Is this what Jim does?’ Jim does supply chain? Holy cow. That’s important. That’s cool.'” So, all of a sudden, in 2020, the field of supply chain grew respect. And so, that’s the first R.

James Tompkins (21:18):

The second R followed in 2020 later in the year when we started to have failure in supply chain. You mentioned the toilet paper issue. I mean, you know, we had websites telling us where you can go to buy toilet paper. [Inaudible] tomato soup. We can’t find tomato soup any place. So, what we found is we lacked resilience. And so, resilience is the topic.

James Tompkins (21:42):

Resilience, if you’re a physicist, you think of resilience if you hold a ball out and you drop it, the ball will bounce right up to the height of your hand. That’s the resilience of one. A resilience of 0.5 is you drop the ball and it drops half as high as it fell. That’s the resilience of 0.5. So, the question is, how well are we able to bounce in the supply chain when you have these disruptions?

James Tompkins (22:07):

And that’s what leads to a tremendous new way of thinking about things where supply chain must change. And so, what we’re seeing is we’re trying to get back to synchronization by dealing with this bouncing ball with our unknown of supply and demand and the lead times are varying. And so, what we’re seeing is we need to change what we do with supply chain. This is now being addressed in a very difficult way. There’s some people out there that have been doing supply chain for 20 years and they say, “Hey, wait a minute. I got promoted. I’m the chief supply chain officer of this company. And I got promoted because I knew how to do just in time. I knew how to do reduction in cost. I knew how to go to low cost country. I don’t want to change what I do.” And what I tell him is, “Sir/ma’am, you have to change because what you’re doing, it doesn’t work anymore.” And so, what we need to do is we need to move beyond where we are with a new technology that allows us to manage this level of variability, or we have to take total control, as Tamara has said. Those are our two choices.

Kevin L. Jackson (23:20):

Tamara, R-E-S-P-E-C-T. I see Jim got some respect right now.

Tamara McCleary (23:27):

I don’t know. I still think my word sexy works if his wife came in, sat down, and spent time with him. Jim, you just got a lot sexier. See.

James Tompkins (23:36):

I did. I did. Thank you.

Kevin L. Jackson (23:40):

Okay. Okay. We got to keep this on rails here. Be professional. So, Tamara, what additional challenges should leaders expect to grapple with, as if there’s not enough right there in front of them? What’s coming down the pike? I mean, we’ve already gone through the biblical pet plagues.

Tamara McCleary (24:02):

Yeah. Going there, I mean, how many of us had war on our minds when the pandemic started? It’s just like one thing after another. But you have to see, I mean, at least it is for me, a challenge to go, “Okay. These are all the things with which we didn’t anticipate. However, they have incredible impact.” And a year ago, I wrote an academic paper on utilizing drones to mitigate supply chain issues in developing countries without critical infrastructure, such as roads to deliver. You know, when I was writing this, it was really critical. They weren’t getting their vaccines. And so, obviously, back when we were talking vaccines, we were talking about cold storage type issues and how do we monitor and make sure that these products get to the end people still valid and usable. And so, drone delivery was a big one.

Tamara McCleary (25:04):

Obviously, in the United States, we have massive hurdles with FAA regs with respect to drones just being able to deliver. I mean, I’m sure all of us have seen those fancy little marketing ads where you see the prescription med dropped off to an individual’s home. That’s marketing at this point in the United States. That is just not happening. There are myriad of reasons why there’s a problem there, such as security implications, air traffic control, safety, you name it. I have a huge paper on it. It’s about 50 pages long.

Tamara McCleary (25:39):

But when you look at transportation, such as getting critical supplies in and out of a war torn area, this is where we have to look at, not only how is the supply chain disrupted to us, say with war in Ukraine, but how is the supply chain disrupted for Ukrainians? How are they getting healthcare supplies and food, water, things that they need, when you can’t use the roads that used to be there? So, you know, we’re looking at ways of using other modes of delivery and transportation.

Tamara McCleary (26:21):

Jim brought up something that I think also makes me think how we have to forecast ahead. He talked about agricultural products. And did anyone even realize that Russia, the largest producer of wheat. And with sanctions in Russia, they’re also the largest producer of fertilizer in the world. Fertilizer, which affects absolutely everything that we eat. And Jim mentioned this, Ukraine actually produces 70 percent of the global supply of neon gas, which is directly used in semiconductor manufacture. So, this exacerbates the problem we were already having with microchips since COVID. Has anyone even attempted to buy a car or even buy a used car? Or, hey, how about the problems with even renting a car right now? Because rental car companies, again, part of that supply chain do not have enough vehicles.

Tamara McCleary (27:17):

So, all of these things, looking at it from a global economic perspective, which is really what I’m trying to do is put these puzzle pieces together, is, we are going to be looking at prices going up. If we don’t have access to fertilizer for farmers to grow food, look at those prices going up. If we don’t have wheat, how many products contain wheat in them? All you have to do is go gluten-free for a day to realize that almost everything has wheat in it. So, prices will go up. An interconnected global economy in the midst of a global conflict brings things to a grinding halt, things that we didn’t even conceive of before. And so, I think that these are things that we have to consider looking at, as we look at the entire picture, and realize how complex it is and how complex our world is today.

Kevin L. Jackson (28:12):

Well, you’re really bringing up an important aspect of the supply chain, the big rush to off shoring and now you hear the big wind. The sucking wind you hear is sucking everything back to on shoring. So, Tamara, your vision, once again, is kind of scary. But, Jim, does that align with what you see? Or is there some kind of technology that’s going to drop out of the sky to help us address all these supply chain vulnerabilities?

James Tompkins (28:49):

Well, I love this conversation. You know, we go from sexy, to fertilizer, to interconnected global economy. And such an exciting opportunity here to talk about the technology we need moving forward. In 2003, I wrote this book entitled No Boundaries. And the book describes six levels that we need to go through to get where we need to be. Now, the book, when I wrote it, was aspirational. We didn’t have cloud computing back then. And you can’t truly have a supply chain without boundaries without cloud computing.

James Tompkins (29:35):

However, the six steps I said, step one is business as usual. And business as usual was when the individual link of the supply chain didn’t work. It’s where the salespeople didn’t like the finance people. The finance people didn’t like the procurement people. The procurement people didn’t like operation. And the company was at war. Your enemy was the guy three doors down the hall from you. And so, when I said we need to replace link being business as usual, being broken, stage two is link excellence. Well, link excellence is when the people in the company all work together in unison to accomplish the objective of the company. So, that was link excellence.

James Tompkins (30:19):

Level three is visibility. And visibility says, let’s look down the chain. Let’s look up the chain. Let’s understand what’s going on. And then, we can base what we do based on what’s going on before us and after us. That was level three. Level four said, let’s go beyond visibility and start collaborating. Let’s start working together from one company to the next company, to the next company. And in that way, we can reduce cost out of the supply chain, but in a way that’s still going to be resilient.

James Tompkins (30:51):

Level five is synthesis. And the way I view synthesis is you have a big flame of synthesis. And over this flame is a chain, and you got a red link and a blue link and a green link. And the flame of synthesis melts those links, and you create a molten metal. Molten and it’s flowing, you got a green, you got a blue, you got a red. And it’s flowing throughout the entire supply chain. Once we do that, we then want to add velocity. So, we add velocity and then what we do is you go quicker and quicker and quicker.

James Tompkins (31:33):

Now, what this has taken us to today is not technology falling out of the sky, but technology that’s real. What we have today is we need to replace the supply chain with a digital supply network. With a digital supply network, everyone in the supply chain has the same view of the truth. There’s a single version of the truth. And everyone in the supply chain in real time is connected and we know what is happening. And so, we have an understanding, “This product was supposed to arrive tomorrow at noon.” But, now, we find out it’s not going to arrive until a week late.

James Tompkins (32:13):

So, how do we respond to that disruption? And the answer – and Tamara is an expert on this – is dealing with artificial intelligence and machine learning. What we can do is we can make the supply chain autonomous. About 90 percent of the problems we have, artificial intelligence can solve for us. It’s going to say, we can do this, we can do this, we can do this. And then, we use machine learning to expand the knowledge set that artificial intelligence is controlling in the supply chain.

James Tompkins (32:42):

And in this way, what we do is we eliminate what traditionally has been the problem, planning and execution. And planning and execution had been treated like two different things. And, in fact, what we need to do is eliminate the word and. We need to have a new function called planning execution. It’s one word. No space. Planning execution is one function. And then, we have the ability to execute based upon the information we have, based on how the entire supply network is functioning.

James Tompkins (33:11):

Aristotle is the one that first invented this thinking process, because he said the whole is greater than the sum of the parts. And so, the digital supply network is a force that allows us to take raw materials, convert them into funnel product, and get them delivered to the customer. And so, it’s a huge, huge, huge, new way of thinking. And what we need to do is we need to throw out the old links of the chain and, instead, create a unified network.

Kevin L. Jackson (33:41):

Wow. I tell you, you’re singing my song. I mean, Digital Transformation, you have to build an ecosystem where everyone is participating and getting information at the same time. So, these crises that we get every day, like I think the newest variant, the Omicron, is now on VA, right? And we have this horrible war in Europe. Maybe we can get better just by communicating and talking to one another. But from a technology point of view, I understand that things like the Internet of Things and that the tracking of all these components could go a long way towards helping manufacturers.

Kevin L. Jackson (34:37):

I understand that some of these devices can be used to actually sense the environment and measure specific aspects of the world, like location, and temperature, humidity, even speed of movement, and other factors. These can really help in this communication across the ecosystem. And even today, some of the form factors that are being used like RFID, smart devices, and mobile sensors could really help. So, Tamara, how should executives view the Internet of Things? Is this a way to expand and build their own ecosystems when it comes to improving their supply chain?

Tamara McCleary (35:30):

Kevin, Jim had me at artificial intelligence and machine learning. That’s all I can say. Oh, God. Jim, I love how you just set all these things up for me so perfectly. We have to do this more often. I mean, when we look at what executives need to do – and, Kevin, you and I certainly have been talking about digital transformation before it was cool. And then, actually we’re talking about before that term got worn out.

Kevin L. Jackson (35:59):

Before it was sexy. Oh, I’m sorry.

Tamara McCleary (36:01):

Yeah. It went from obscure to sexy, to banal bland, redundant. But, honestly, what Jim said is true. What does AI need? It needs data, it needs inputs in order to do what it does. And so, everything along that complex supply chain process can be improved with the Internet of Things. And we’re talking about management. We’re talking about oversight applications. We’re talking about forecasting, operational efficiency. But, really, also to what Jim was talking about, with this communication being key is that it’s the transparency that decision makers must have.

Tamara McCleary (36:49):

So, what’s interesting is, you know, coming from a CEO role, back into academia, and back into research, I’m looking at it from the lens of needing to run an organization, needing to forecast for my organization, needing to have all of the data that I need in order to make sure that I’m making appropriate decisions to lead the organization into the future. And AI can help us out with taking in all of this input.

Tamara McCleary (37:22):

And Jim talked about that planning execution, I love it. Because, Jim, what that reminds me of is edge computing. That’s planning execution right there. And so, as we have faster computer processing and more inputs giving us data through, say, IoT, RFID, all of these things are bringing content into AI to be able to make a better decision. But for the C-suite they need the dashboard. They need to see how the communication is happening. And to Jim’s point, a lot of communication breakdowns happen within the organization. You know, what did he say? The person next door, that’s so true. And we all know how siloed organizations are.

Tamara McCleary (38:09):

And besides that, think about the complexity of, not only is your own internal organization oftentimes siloed, but now you are dependent on all of these other nodes outside of your organization to be able to make things happen within your organization. And that level of transparency is often difficult to get. That level of communication is difficult to get.

Tamara McCleary (38:32):

For instance, if you enjoy beer – I thought I should bring in something fun and liven up our audience to wake them up – if you enjoy a good microbrew, think about the fact that if we’re not getting the fertilizer that we need to grow those hops, to grow the barley, then the manufacturer who’s actually producing the beer isn’t going to get the hops and the barley they need to produce that beer. And then, beyond that manufacturer, now we have the retailer who’s, you know, this person’s job is to order to make sure they have, not only just enough on the shelf, but not too much back stock, because back stock is bad as well. And so, you have all of these pieces in play and if you draw the line all the way to that glass of beer, that fertilizer that’s in a war torn country and not getting here is going to affect the entire supply chain of beer.

Tamara McCleary (39:28):

So, I think that when you talk about using artificial intelligence to help us take all of these inputs to streamline in a way on a dashboard, an executive can look at it, a CEO can look at it, and see, “Oh. You know what? We are going to have a bad bottleneck in about two months.” Not today. Today’s a bad day to figure out that you have a problem. You need to be able to forecast. And I do believe that this is where we’ll see technology, such as the Internet of Things, that can get for us what we need for AI and machine learning to do its job to help us better plan, as Jim said, planning execution, so that we’re not reactive. We are responsive. And, hopefully, we are responding before it happens. A reaction is a bad, bad idea for an organization. A response is really where you need to be.

James Tompkins (40:28):

Tamara, I love what you’re saying, because when I was talking about visibility, the third step of the six steps, visibility is critical. IoT, getting the Internet of Things developing for us that information that we can then turn into decisions. So, you’re right on with what you’re saying.

James Tompkins (40:47):

Another point that I wanted to make is we got talking about this information availability and making decisions about what’s happening. There’s another major shift in what have to think about. I’m a PhD Industrial Engineer, so I was trained to optimize things. Unfortunately, optimization is now obsolete. In Germany, what they did is they decided to buy the wiring harnesses from Ukraine because that was the optimal solution. Unfortunately, that optimal solution has now closed all their factories. And so, what we need to do is not optimization, but instead optionization. How do we develop options that allow us to continue to operate even though disruptions occur? And so, instead of optimization, we need optimality. We need to look at options that allows us to really have a solution that we can flux with the artificial intelligence and make something really happen down the road and not be reactionary. Right on. Yeah. I love it.

Kevin L. Jackson (41:53):

Well, I tell you, I mean, you guys are really telling the audience, telling us all, where we need to be. But to be honest, you hear artificial intelligence, and Internet of Things, and machine learning, and cloud, your eyes started rolling back. The audience, I’m speaking for them, I’m sure they’re going to let me know. But they want something now. They want to know what they can do right now to, maybe, get to that nirvana of the future. So, Tamara, can you give the audience some practical and actionable – and I’m emphasizing actionable – advice for manufacturers who, for years, for decades, have been slow to adopt new tech technologies. What can they do right now to fortify their supply chains?

Tamara McCleary (43:01):

Yeah. Absolutely. I think it’s great that we drill down to some level of specificity for some takeaways. And, genuinely, what I’m doing as far as projects at school are solving for problems. So, one of the things I would say that I’m using with all the problems that I’m currently working on, whether that’s working with transportation issues for cities, for electrical grid issues, Jim earlier mentioned storms and events that we can’t control, for a lot of these, people don’t realize have massive supply chain issues. It applies to any organization. Any supply chain issue is exactly what Jim said – I use this term just because it’s such a frequent term for me with financial services – and that is diversification. And his options is basically diversification.

Tamara McCleary (43:57):

And think of it this way, if all of your bets are in one basket, that’s a really poor financial strategy. A very poor business strategy in your supply chain is to have only one option, as Jim said. That’s putting all your eggs in one basket. It’s dangerous. So, from a practical risk mitigation perspective, a takeaway right now – and this is what I ask companies that I work with – is, what is your plan B, and your plan C, and your plan D? So, most companies, I’ll say, “Do you have a plan B?” “Sure.” “Okay. What’s your plan B?” They cannot verbalize it. That’s a problem. You need to know what your plan B is, but it’s not good enough anymore to have just a plan B. And to Jim’s point again – it’s just been so brilliant having Jim on this talk because, Jim, I absolutely love the work that you’ve done and you put into it. And you clearly are a industry expert on this – is that the plan B, the plan C, and the plan D, yes, these options, that Jim talked about, might not be the most cost effective.

Tamara McCleary (45:07):

But I’ll tell you what, you have to already have those relationships established with other vendors, other suppliers, or maybe even pulling some aspects back in-house, or don’t get rid of those people that have all this knowledge in your organization of how to do things. And, instead, find another place for them in the organization so in the event you have to pull things back in-house, you have not lost your intelligence, your knowledge, your wisdom base within your organization. So, the people aspect of supply chain cannot be emphasized enough. Technology is very important, but you need those keepers of wisdom in your organization who knew how to do it when, who knew what to do before. Those people are critical and valuable. And I’ll tell you what, in times like these, all of a sudden their intellectual property is coming to light.

Tamara McCleary (46:03):

So, that people factor, having your options, as Jim said, for me, it’s that diversification, your plan B, your plan C, developing those relationships with those vendors ahead of time. Again, if you’re reacting, it’s too late. You have to already have the relationships established. They may not be your cheapest sources of the product you need, but when the chips are down – and, wow, that’s a pun, isn’t it? When the chips are down. That was totally unplanned – it’s more cost effective to pay more for what you need to produce to keep your sales going than it is to be completely without, and unable to produce, and unable to sell. One is that it affects your bottom line, but you’re still afloat. The other is you may lose the business.

Kevin L. Jackson (46:50):

Right. Yeah. You know, the word of the day is optionality. So, as I say, the phone lines have lit up. It turned on the audience with that.

Tamara McCleary (47:06):

You know, Kevin, I have to tell you, you totally got me thinking. I have to leave you with a last line and that is, we talk a lot about agile, don’t we all the time? But agile is fragile without a contingency plan.

Kevin L. Jackson (47:21):

Absolutely. Absolutely. So, now, I’m going to show, the questions are coming in. And this first one, I tell you, they threw an acronym on me, B-O-P-U-S. So, I understand that’s the Buy-Online-Pickup-In-Store. So, I’m going to throw this first question to Jim. How does the buy-online-pickup-in-store and direct to door delivery affect the supply chain?

James Tompkins (47:58):

Oh, great question. The reality is, before we had buy-online-pickup-in-store, who did the picking of the orders? It was you and I. You and I walked down the grocery store with a cart and we took one of these and one of these, and one of these. We didn’t get paid to pick those orders. We were shopping. And that’s what we did. But, now, what the customer wants is they want to pull up in front of the store, pick up their cell phone and say, “Hey, I’m here. My name is Jim Tompkins. Is my order ready?” And the guy says, “Of course, sir.” And he rolls out, puts my order, and puts it in my trunk. Now, that is called each picking. We’re picking each’s, one of these, one of these, and one of these. Each picking is very, very extensive.

James Tompkins (48:42):

What we used to do is we did case picking. We picked the case. We put the case on the shelf. And, now, the customer came and picked it for free. So, what we find with a buy-online-pickup-in-store, we have to change the entire supply chain to not ship a case to the store, but to have a way of picking the orders from the store. Now, a lot of us have used the different professional shoppers to do the shopping for us, but we have to pay them a fee. And, now, what we’ve done is by having so many professional shoppers in the store, when you and I go in the store, we get run over by these professional shoppers because they’re traveling very quickly to get the orders done.

James Tompkins (49:21):

And, in fact, we’ve done some studies depending upon the variety of the product in the grocery store. If you go above eight to ten percent, it depends on the number of items in this store, but let’s just take the lower number, eight percent. If you have more than eight percent order picking in the store, it’s inefficient to do it with professional shoppers. Today, we’re running around 26 percent of buy-online-pickup-in-store and we have a professional picking it from the shelf. That doesn’t work. And so, we have to build in robotics in our warehouses to do that so we can deliver the order to the consumer.

James Tompkins (49:55):

The second part of the question is direct to consumer, delivering it to the front door. What are the options for delivering to your front door? The options used to be, you could do quick and inexpensive, or you could do slow and cheap. So, you go quick and inexpensive, slow and cheap. So, what does a customer want? They want it quick and cheap. They said, “Wait a minute. That’s not one of the options. You can’t do it.” They said, “That’s what we want.” And so, they want it delivered to the door and they don’t want to pay for it.

James Tompkins (50:36):

So, how do you deliver to the door without paying for it and doing it quickly? The answer is, you have to change where the product is inventoried. Instead of having large distribution centers in the center of the country, we now need fulfillment centers close to the high population density. That has totally changed the supply chain. We’ve gone from a big distribution center in the middle of Ohio. And, now, what we have is four fulfillment centers in the State of Ohio that can deliver to them quickly and inexpensively because you don’t have to travel very far. And so, it’s a whole new supply chain with a whole different impact on where we’re going. And so, it’s the difference between night and day. It’s totally different the supply chain of today versus the supply chain that we’ve faced when Jeff Bezos first told us that we’re going to be able to deliver to your home and not charge you for it.

Kevin L. Jackson (51:26):

So, is this the end of Amazon? Oh, no. But I tell you, those are two very important trends in the industry that everyone’s going to have to pay attention to. So, Tamara, what trends are you seeing in the supply chain? Why don’t you break them down into things that you like to see that are encouraging and maybe things you’d like to reverse?

Tamara McCleary (51:56):

Yeah. And first, Jim, I got to tell you, one of my sons is actually one of those professional shoppers. He’s 21 and he loves that job. But I would say that, you know, we’ve talked a little bit about the Internet of Things, Radio Frequency Identification Tags, sensors, we think about barcodes, GPS tags, chips, and they are all –

Kevin L. Jackson (52:26):

QR codes.

Tamara McCleary (52:27):

Right. I mean, it really helps with the locations of products, packages. How many of us have tracked our packages and to see where it’s at, so that you can intervene if it’s off in the wrong direction, or going to the wrong address, or where is it, where is it held up at. Those are all really useful things that I think a lot of us already have access to as individual shoppers. But one of the things I’d like to drop into the bucket here is blockchain. And a lot of times I think we think of blockchain being relegated to the financial services industry. But I think it has enormous implications for supply chain management. You know, it can be used in the chain to know exactly who’s performing what, time, where, where in the world is the location of this action, it facilitates valid, effective measurement of outcomes. And Jim talked about looking at performance of key processes and things like that. And I talked about these inputs that we need to have to be able to automate appropriately and to automate with efficacy. And once the inputs tracking data are on that blockchain ledger, they’re immutable.

Tamara McCleary (53:42):

So, I think that other suppliers in the chain – because think about this, we’ve talked a lot about what an organization can do to try to manage control within their org. But the elephant in the room is you can’t control what’s outside of your organization – using blockchain, everyone along those nodes can track and see the shipments, deliveries, and progress of everything. So, blockchain produces an awful lot of trust and transparency among suppliers, which I think also is increasing efficiency because it’s communication.

Tamara McCleary (54:18):

And that’s what the biggest breakdown is in supply chain management, is, coordinating that communication, ineffective communication, lack of communication, or lack of transparency with people not sharing critical information to help others downstream and upstream, make adjustments as they need to, because they’re needing to either up level production or scale down. So, blockchain does that for us. And I think it provides an accurate way of measuring product quality.

Tamara McCleary (54:55):

During transportation, I told you about the drone deliveries and the cold chain, and realizing that there are certain products, there are certain foods that have to be kept at a certain degree temperature, and it’s a terrible, terrible waste of food when refrigerated trucks or grocery stores toss out food that they can’t certify has been kept below a certain temperature. And you think about the hungry people of the world, what are we doing wasting all of this food.

Tamara McCleary (55:30):

So, I think blockchain-based solutions give buyers and suppliers much more trust, and confidence, and transparency. But it also gives the consumers more confidence that the products that they’re getting, they know where they came from, they know the quality. Recently, I bought fish in a store where it had the blockchain. I could see – get this – the exact boat that fish was caught off of. Isn’t that amazing? So, I know where in the world, what day, and what boat. That is incredible. That’s blockchain technology applied to supply chain.

Kevin L. Jackson (56:09):

Wow. Sounds like another vote for the ecosystem. So, thank you. Thank you very much for that, Tamara. The producer is yelling in my ear, so I have to wrap up. Could you both let the audience know how they can get in touch with you directly? Hey, Jim, why don’t you go first?

James Tompkins (56:31):

Well, the direct route is email, jtompkins, T-O-M-P-K-I-N-S, @tompkinsventures, T-O-M-P-K-I-N-S-V-E-N-T-U-R-E-S,.com. Or alternatively, LinkedIn, I’m James A. Tompkins. So, I would love to chat with you, please reach out.

Kevin L. Jackson (56:53):

Great. Thank you. And, Tamara?

Tamara McCleary (56:57):

I’ll be sure to cyber stock you, Jim. I love to cyber stock everybody. So, LinkedIn, for me. If you guys want to get in touch, you’re interested in more conversations, you have an interest in this area, LinkedIn is the best place to get a hold of me. Send me an InMail message if you like or send me a message on one of the streams.

Kevin L. Jackson (57:21):

Thank you. And we’ll have that information in the show notes so you can go directly and just click on it. So, thank you, both, for that enlightening information and your tremendous insight.

Kevin L. Jackson (57:39):

That brings us to the end of the AT&T Business BizTalks Chat on Supply Chain and Manufacturing. Please keep your ears open for the next BizTalks event. You can learn as soon as it’s announced by following ATTBusiness on Twitter, so that you can be right there and listen in. With that, this is Kevin L. Jackson wishing all of you a bright and transformational future. We’ll see you next time on AT&T Business BizTalks.

Intro/Outro (58:18):

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