Supply Chain Now Episode 473
“Emerging technologies such as AI and robotics and the Internet of Things have created ways of doing things in supply chain that we couldn’t even imagine 10 years ago. This is a very exciting time.”
Ashfaque Chowdhury, PhD, President – Supply Chain, Americas and Asia Pacific at XPO Logistics, Inc.
XPO Logistics is one of the largest transportation and logistics companies in the world. Today they do business in 43 countries and have over a hundred thousand employees. They invest over half a billion dollars in technology annually, a commitment that has allowed them to build high performing, sophisticated supply chains.
Like many other executives, Ashfaque Chowdhury, PhD, was faced with significant operational and safety challenges in early 2020. He worked closely with his company’s business continuity team to figure out what needed to be done. It was an expensive decision, costing $49 Million in the second quarter alone, but in his leadership team’s opinion, it was worth it.
In this conversation, Ashfaque tells Supply Chain Now Host Scott Luton why there is a lot of room for both creativity and analytics in the field of supply chain:
· Responding to changes in consumer behavior by making fundamental changes to how the supply chain works
· The critical measures they have had to implement across facilities in order to create and maintain safe working environments
· The three things XPO Logistics figured out in February that have allowed them to preserve business continuity despite the challenges of 2020.
It’s time for supply chain. Now broadcasting live from the supply chain capital of the country. Atlanta, Georgia heard around the world. Supply chain. Now spotlights the best in all things, supply chain, the people, the technologies, the best practices and the critical issues of the day. And now here are your hosts.
Scott Luton (00:28):
Hey, good morning, Scott Luton here with you on supply chain. Now, welcome to today’s show. On this episode, we’re talking with a senior leader from one of the largest global providers of transportation and logistics services in the world. We’re certainly gonna be working hard to raise your supply chain leadership IQ today. More to come on that in just a moment, but Hey, quick programming note, before we get started, if you enjoyed today’s conversation, be sure to find us and subscribe wherever you get your podcasts from. Cause you’re not gonna wanna miss conversations just like this here today, all with snow, with no further ado, let’s bring in our featured guest. Asfoc chattery, P H D president for supply chain, Americas and Asia Pacific with XPO. Good morning. [inaudible] good morning, Scott. Great to be here. Great to be with you. Now we’ve been tracking XPO and, and all the great industry leadership that y’all have been providing through some really tough month then a month out and pleased to have you here and, and, uh, uh, gain some of your thoughts, insights, and sharing that with our audience.
Scott Luton (01:32):
So, um, but you know, I thought we’d like to start always with getting a sense of who you are more as a person before we get to the business. So, you know, tell us a little bit where, where, where, where are you from? Where did you grow up and give us some anecdotes about your upbringing? Well, uh, I was born in Bangladesh growing up, uh, you know, uh, I was fortunate enough to be a, uh, you know, get a lot of opportunities academically. I went to a college in India and it Bombay, which is one of the premier, uh, colleges in, in, in subcontent. And, uh, I got a scholarship to do my masters and PhD at Lehigh university in Bethlehem, Pennsylvania. So, uh, after that, uh, you know, say I was an engineering, uh, after that I had an opportunity to come into the supply chain industry.
Ashfaque Chowdhury (02:26):
And, uh, I’ve been here since for 25 years becomes addictive, doesn’t it? Yes. It’s been a amazing journey. Uh, you know, uh, when I started the business, uh, you know, this was before, uh, you know, we barely had cell phones. I mean, hardcore people think that today, but then now we are dealing with robots. Yes. It’s funny as humans back then, we had a hard time communicating just a couple miles apart. Now we’ve got robots talking to each other around the world, you know? Uh, it’s really funny. All right. So one more before we talk XPO, uh, you’ve been in supply chain for quite some time. You were alluding to some of the changes in industry. Do you think it’s becoming more appealing for, you know, as we know, as an industry we’re competing for top talent and as you spoke about, once it got its claws in you, it kept you right here. Do you think it is become more appealing for the top talent around the world to get into splotching? Okay.
Ashfaque Chowdhury (03:21):
Well, Scott, I think one of the things that I enjoyed about supply chain from the very beginning, it’s that, uh, this is an industry where, uh, there’s a lot of room for creativity, as well as analytics. So if you have a mind that is engaging and you’re trying to help people accomplish something, right, whether a consumer gets their package or a manufacturer gets their production done better. Uh, so, uh, it has always been fascinating to me. Uh, I do think that in the recent times with the advance of technology and us, uh, the importance of supply chain and everybody’s lives that become much more apparent. It is definitely a lot more appealing at XPO. We have a program called XPO graduate, where we attract, uh, uh, uh, college students to, uh, come and join XPO. And, uh, we certainly have noticed in the last four or five years, a significant amount of, uh, you know, people, uh, wanting to join our industry and very, very talented individuals coming into our industry.
Scott Luton (04:31):
I love that. That’s what we’ve heard from so many other business leaders, and it’s so good for the industry. And one step further, you know, the tough time for so many, as we all know in 2020 and, and really the latter half of 2019, however, one of the silver linings from my perspective is consumers are really understanding now what the word supply chain mean, and what’s behind it. And that’s great for industry as we, as we move forward for attracting top talent and beyond. So that’s great to hear as fuck. Um, so let’s talk a little bit more about XPO logistics and, and, you know, for the two people out there that may be don’t know what, what the company does. Just share a little more about what you do and then your role with the company.
Ashfaque Chowdhury (05:12):
So XPO is one of the largest transportation and logistics companies in the world. It’s a fortune 200 company listed in New York stock exchange. Um, what, uh, we do, uh, varies in the different markets and the different lines of business. We do everything from, uh, our, uh, you know, less than truckload care were second or third, largest, less than truckload carrier. We’re the largest heavy goods last mile delivery company. So if you were to buy something that’s a hundred pound and above, uh, most likely we are the ones who will deliver it to your home. Uh, we are the second largest contract logistics company in the world. So, um, you know, uh, we have business in intermodal. We are one of the largest truck brokerage companies, uh, in the world. And, uh, we’re a global company. We do business in 43 countries today, over a hundred thousand employees. And, uh, we have a large amount of our business and it’s in the U S and the Western Europe
Scott Luton (06:13):
Eat my Wheaties this morning, hearing all of that has made me tired. Um, it’s really remarkable what goes on, uh, you know, uh, to keep business and supply chains moving forward. And it’s so neat to as more and more folks are connecting the dots there. And then your role, what, where do your, where do you spend your time?
Ashfaque Chowdhury (06:34):
Well, expose organized in, uh, two segments, transportation and logistics. I run the logistics business for the Americas and Asia Pacific region.
Scott Luton (06:46):
This next question, I’ve already, I’ve got a couple assumptions based on what you’ve shared. I I’m seeing some of your passion come out and these early questions, but, uh, in, in your role and beyond what, what are some of the more exciting things that are taking place in global supply chain in your view?
Ashfaque Chowdhury (07:03):
I would have to say the changes in consumer behavior, uh, means that, uh, the supply chain that, uh, you know, the way it has been structured in the past is no longer adequate, uh, all, all of us buy more things online, our expectation of how fast we receive that product, uh, uh, you know, a lot faster. Uh, we, when we go to work, we don’t, uh, change our expectations. So even within business, people have the same level of expectation in visibility, in ability to order things, the ability to receive things, uh, the level of performance that we expect. Well, all of that translates into a much higher performing, much more sophisticated supply chains. That’s enabled by technology. Now at XPO, we’ve been investing over half a billion dollars in technology every year. And, uh, that has given us a lot of, uh, insights and a lot of capability to me, these kinds of demanding, uh, you know, uh, changes that we see happening. So it’s a very exciting time. Uh, and then finally, I have to say that the emerging technologies such as AI and robotics and, you know, uh, internet of things, um, all of these things have, uh, you know, created a brand new ways of doing things in supply chain that we couldn’t even imagine 10 years ago. So it’s a very exciting time.
Scott Luton (08:40):
I completely agree a lot of kindred spirits there. Um, and I liked that phrase no longer adequate, right? We, we, we’ve got to reinvent what, uh, our approach to global supply chain. We were talking with a firm earlier this week. And as of the conversation, we talked about how, you know, a couple of years ago we were playing chutes and ladders, and now we’re playing, we’re playing with monopoly rules, trying to play an old game, and the whole game has changed. And that, that created an interesting visual, at least in my mind, let’s talk about the people of supply chain and the essential workers in supply chain is, as we both know the emphasis, which has been so welcome to really double down and invest in and protect our workforce across industry, of course, you know, frontline and healthcare. Uh, but, but also equally as important is all the people that, that allow folks to get things, you know, during quarantine the lockdown and whether they’re drivers or fulfillment workers or warehouse workers, or in our manufacturing plants protecting these wonderful people, supply chain, uh, XPO released a white paper, entitled essential support for essential workers, which I thought was a very welcome piece of thought leadership for industry to our listeners.
Scott Luton (09:57):
You should check that out. So what were some of the, or what were the most critical measures rather that you’ve implemented to protect your workforce?
Ashfaque Chowdhury (10:06):
So, Scott, let me first start by thanking all the workers from every company across our entire industry. It has become clear through COVID-19 the pandemic who is really essential for us to conduct our lives every day. Uh, the folks who drive our trucks, uh, people who are riding forklifts in our houses, the people who are picking the supervisors, the quality checkers, the Packers, all of those people, my hats off to them. They have done a tremendous job that allows everybody else in the, uh, in, in our communities to function because we have food, we have clothes, we have all the things that we need. So Mike Banks to them, uh, we wrote the paper essential support for essential workers, because we were in a unique situation. We had tens of thousands of employees that needed to be kept safe. And, uh, at that scale, we have to figure out things as to how to do that very early on.
Ashfaque Chowdhury (11:18):
So, uh, back in February, we started this project, uh, with our, uh, business continuity team. And, uh, we figured out a lot of things that work for us. And we wanted to share that with everybody, uh, in answer to your question with regard to what are the key things that we implemented, I would boil that down to three things. Number one, you need to do, uh, change how we work and how people are in every facility through looking at how work gets done. So every job needs to be reevaluated for safety, and you have to have adequate supply of PPE and you have to make changes. So the work can be done safely for everybody. Secondly, workers need a emotional support as well as, you know, financial support. So, uh, providing support for, uh, employees during pandemic. So if they’re have to go into quarantine or they’re sick, the level of, uh, benefits and, uh, you know, and protections that have is a very important ingredient because it basically make sure that employees do the right thing.
Ashfaque Chowdhury (12:42):
So they feel safe. They stay home, they still get paid. And the third element is to have a dedicated team that is helping everybody make the right decisions all the time, uh, problems happen when, uh, some leader or some employee, somewhere in the supply chain faced with the situation makes the wrong choice that, uh, then creates a domino effect of infecting other people. If that person’s aware that there is a support that they can call or information that they’ve been trained with, they will make the right decision. And that difference is a huge difference in terms of the eventual impact of the supply chain. So, uh, those to me are the three big things that, uh, everybody should consider.
Scott Luton (13:32):
It strikes me if I may add what seems like also has been really important to XPO. His approach is you’ve got to have a leadership team that’s very deliberate and, you know, it’s all about deeds, not words. And that seems like you’ve got that in spades, which is very, it’s so great to hear. And so refreshing to hear, because, you know, for so long, the workforce can be overlooked, whether it’s by us, the consumers, or, you know, different leadership and different places. And it’s great to hear
Ashfaque Chowdhury (13:58):
If I’m in one other thing. Sure. At XPO, our entire leadership team, starting with our CEO, Brad Jacobs was unequivocally clear. Our total priority was safety safety of our employees, safety of the communities, safety for our customers. And, uh, you know, in our second quarter, uh, announcement, our results are unless, uh, calls. We announced that we spent $49 million in just the second quarter in, uh, in, in this. So it was a financially a expensive decision, but we think that it is the right decision, uh, for the long run. So we have a functioning, uh, workforce and our people are as safe as we could have made them.
Scott Luton (14:47):
I love it. I really, really do so, um, you know, deeds, not words, we can’t say that enough and I really appreciate y’alls approach there. So more broadly speaking, do you believe that the heightened emphasis on our global supply chain workforce, you know, which again is, has been one of the handful of silver linings from this whole pandemic era? Is it here to stay?
Ashfaque Chowdhury (15:11):
I think it will be here to stay for, uh, you know, many years to come, uh, because, uh, from all I read, we are not at the end of this process, we are maybe somewhere in the middle of the process and, uh, we have to adapt to what, uh, the world is going to look like the world’s going to change, not just because of the pandemic, but, uh, the changes for behavior on how we go about doing everything. One of the things that we buy, how do we buy how we live our lives, right? That has changed people drive less. They go to restaurants, less, they buy more things online. I don’t know that those things are gonna change. I mean, I love my curbside pickup. I don’t know that pandemic or not. I’m going back and I love that. So, uh, so then that store now has a problem or an opportunity how you look at that now their logistics has to change. So, uh, what I want at, at, within that 20 minute window, they have to deliver, uh, and have ready to pick up well, uh, these things I think are going to change, you know, um, and, uh, all of us will thrive when we, uh, you know, embrace that change and figure out how we’re going to work in the future. And, uh, certainly the consumer awareness that, uh, this, uh, service supply chain work is a critical, vital function I think, is going to remain.
Scott Luton (16:47):
So let’s shift gears a bit and let’s talk about one of the most unique peak seasons. Um, so many would argue we’ve been in peak for already, and we’re entering a second peak season. Um, but it it’s come early, certainly in arguably and here to stay. So how did XPO deliver for its customers during COVID, you’ve alluded to some of it, and how are you preparing for the extended holiday peak, you know, given the surge in e-commerce,
Ashfaque Chowdhury (17:14):
As you mentioned, know, there’s a huge surge in eCommerce. And what I would say is the e-commerce of 2025, you know, basically appeared in 2020. We are as an industry, adapting to this, uh, massive, uh, amount of volume to fulfill a unit through a store channel versus an eCommerce channel. The eCommerce channel requires three times as many people and three times as many space in the warehouse. So this means that we have a massive amount of in our warehouse in order to, uh, you know, keep up with this demand. And finally, the shape of the peak this year, we expect to be much more extended, uh, because, uh, as this much demand comes up, there is not really that capacity in any part of the supply chain to handle this amount of peak. So, uh, every aspect of this, uh, is going to require more time and, you know, Thanksgiving and Christmas are not moving.
Ashfaque Chowdhury (18:22):
So you have to start early if you want to get done. So we see promotions, you know, uh, that’s going to happen earlier. Uh, uh, we see, uh, the ordering and the peak. I think it’s going to be incentive to start much earlier than normal. Uh, as far as XPO, uh, we expect to hire about 8,000 seasonal workers, uh, for this year, which is, uh, you know, significantly up from previous years. Uh, we have our, uh, bringing online, uh, 3 million square feet of fulfillment, uh, space for many customers, uh, and, uh, you know, our XPO direct, uh, our shared warehousing, uh, uh, you know, uh, network, uh, that is also, uh, very full. And we are a, you know, have many, uh, many, uh, quest to, uh, have, uh, more space and more capacity. And we are working very closely with our customers to, uh, provide as much capacity as we can provide
Scott Luton (19:20):
So much, so much going on. And so much seems like your team’s involved in meeting and surpassing and being able to serve the demand that’s out there now, despite how unique it can be. So what else, how else do you see XPO flexing with that demand? I understand that there’s been some, uh, some, a lot of console, uh, consumer survey data that y’all have been analyzing as well.
Ashfaque Chowdhury (19:42):
Yes. Yeah. So, uh, we are always interested in understanding the trends. And so we have done a number of surveys. The, the, the big takeaway on the surveys is that, uh, I think consumers are not only, uh, buying online, but the types of things that are buying a lines changing as well. We see people very interested in buying things that maybe they wouldn’t have considered before, uh, such as in a large format items, uh, you know, furniture, appliances, exercise, equipment, there are, you know, cars, right? All of these things are, are, uh, now being bought online and consumers feel very comfortable buying it. Uh, so our supply chains and delivery networks have to adapt to make sure that we can meet that demand and deliver that. So that’s an interesting dynamic. The other thing we also see is that, uh, there is differences in different segments of demand.
Ashfaque Chowdhury (20:42):
Uh, so, uh, people who are in the DIY sector, uh, you know, are certainly, uh, seeing a surge, uh, we see that with our customers that are in that area as well. So we see them because I think when people are spending more time at their homes and they’re doing more, you know, sort of upgrades or other kinds of things. So, uh, everything that is involved, uh, with, uh, home, uh, sort of modeling or upgrades is, uh, certainly very, very hot. Um, and, uh, one other important thing to note is not only are we preparing for the peak, uh, demand that we’re going to see in terms of OD bond, but also reverse logistics. XPO is one of the largest, uh, reverse logistics providers, uh, in the country as well. So we are also looking at that. And, uh, as you know, that between the fish seven and every 10 items that are bought online are return. So, uh, soon after this, uh, peak of purchasing, we expect they equally big, uh, peak of return.
Scott Luton (21:51):
I think that’s an area where consumers are also connecting the dots between supply chain and reverse logistics and e-commerce, and that’s been neat to see, uh, in recent months. So, um, no shortage of, uh, I love, I love how you described just, you’re not putting one thing on the pulse. It’s like, you’ve got the whole hand on the pulse of what the market wants and where they’re going, and some of the changes and the segmentation of demand. I love that. Okay. So let’s talk a little more specifically here in the last segment of the interview technology and its role in the warehouse. So speak to that a little bit, and then also speak to how XPO, some of the innovation that you’re leading your organizations leading when it comes to warehousing
Ashfaque Chowdhury (22:34):
Technology. And the warehouse is changing rapidly. A lot of the investments that expose making is with regard to, uh, innovating and, and, you know, essentially creating the warehouse of the future. Uh, we have a number of facilities today that, uh, are, uh, operating in these technologies, you know, uh, so a lot of these things are no longer, uh, sort of a pilot or a kind of concept. They are actual in use technologies. Uh, they involve everything from robotics, which is a big area. There are thousands of robots that are coming online in many of our facilities to AI, uh, to cobots, which is another type of robots that help that work with, uh, uh, workers to make their job easier, um, to a lot of, uh, technology with regard to predictive analytics. So we can forecast much more accurately. Uh, we have, and we can anticipate demand, uh, better, which is a very important aspect in order to be able to meet a very quick fulfill timelines and so
Scott Luton (23:46):
On within the warehouse, uh, what I would say is that these technologies are changing how the warehouses look and changing the jobs that people do, uh, and, uh, with, uh, the concern that we have today with the pandemic, you know, uh, I think thankfully some of these technologies are helping us to, uh, provide that separation, uh, provide, uh, more social distancing within those job designs to enable us to not only, uh, you know, meet the surging demand, but also, uh, provide, uh, more safe workplaces for everybody. And that’s a win, win, win all the way around, um, not only providing more efficiencies for the business in a challenging environment, but most importantly, you know, protecting the workforce, which you got an army of a hundred thousand plus strong and XPO. Um, okay, well, that’s going to wrap up our interview here today without [inaudible] chattery PhD, president supply chain for the Americas and Asia Pacific with XPO logistics.
Scott Luton (24:49):
Thanks so much as fuck a pleasure to have you here and really, really enjoyed your insights on not only what your organization is doing, but the market and the ever evolving market. My pleasure, Scott, we’ll be checking back in with you, maybe, maybe at the end of the year or first part next year. And we’ll see what else has changed in this, in this unique time we’re living in. So on that note, hopefully listeners, you enjoyed this conversation as much as I have. If you like conversations like this, you can check out a wide variety of industry thought firstname.lastname@example.org, fondness and subscribe wherever you get your podcasts from on behalf of the entire team here at supply chain. Now this is Scott Luton wishing our listeners, nothing but the best do good, give forward, be the changes needed. And on that note, we’ll see, next time.
Would you rather watch the show in action? Watch as Scott welcomes Ashfaque Chowdhury to Supply Chain Now through our YouTube channel.
Ashfaque Chowdhury, Ph.D., leads XPO’s supply chain business unit in the Americas and Asia Pacific, with responsibility for contract logistics, reverse logistics, advanced solutions and the XPO Direct™ distribution network. He joined XPO upon the company’s acquisition of New Breed Logistics, and initially served as XPO’s chief information officer for the supply chain unit. Over the course of two decades, Dr. Chowdhury has led the implementation of complex logistics operations for some of the world’s most prestigious companies. He holds a master’s degree in science and a doctorate in engineering from Lehigh University, and a bachelor’s degree in engineering from the Indian Institute of Technology in Bombay, India.
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