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 deployment 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 (00:32):
Hello, everyone. Kevin L. Jackson here in sunny Orlando, Florida at SAP Sapphire. I’m joined here by the IBM SAP consumer industry leader.
Jose Paredes Hernandez (00:45):
Yes.
Kevin L. Jackson (00:45):
Thank you for joining us. I guess the day’s been kind of busy here at Sapphire. Are you meeting all your customers and clients?
Jose Paredes Hernandez (00:53):
Yeah. No, absolutely. First of all, thank you for having me and inviting IBM into this session. It’s a pleasure to be here and, yes, it is a busy day today, most likely it’s going to be tomorrow, but there was also a lot of preparation and work in the weeks before the actual event.
Kevin L. Jackson (01:12):
Okay. So, Jose Paredes Hernandez, right?
Jose Paredes Hernandez (01:15):
That’s correct.
Kevin L. Jackson (01:16):
Did I get that right?
Jose Paredes Hernandez (01:17):
Yeah, you got it right. You got it right at this time.
Kevin L. Jackson (01:21):
So, tell me more about IBM consulting because – I mean, everybody, you know, IBM business technology and they’ve been doing consulting for quite a while, but I think what’s unique here is that IBM and SAP have a like 50-year relationship. How did that happen?
Jose Paredes Hernandez (01:39):
Well, I think IBM, first of all, we always think about our customers, what is the best thing for them. And when I look into the consumer industry, which is the area that I have my responsibilities, SAP is one of the key players, right, for, not to say the player. Right? And because of that, we always think about SAP and how we can help our customers to implement SAP and to enable new business processes, new capabilities and things like that. So that brings us into a needed, most needed partnership for our customers. Right? And we have very great relationship with the retail that we use, also the CPG retail [inaudible] that we use that make it more simple, right? When we work together, we have the same goals from our client’s perspective that simplify the work, right? Sometimes, you know, we disagree in certain areas, but we focus on the areas where we can do collaboration, where we can innovate, and where we can bring the next generation of solution for our work clients.
Kevin L. Jackson (03:02):
One thing, little known fact, SAP was founded by three IBM [inaudible].
Jose Paredes Hernandez (03:08):
Oh, yes, yes. The same thing happened with Microsoft, right?
Kevin L. Jackson (03:11):
Wow. Something – the genesis of all great companies is IBM. Is that – no. Okay. So, your role as global SAP consumer industry leader, that sounds like it’s pretty big. What do you do?
Jose Paredes Hernandez (03:29):
Well, it is a very important role from an IBM perspective. I basically manage our practice, and I consider my key responsibility in three areas, right? Number one, to work very closely with SAP, to define those areas where we want to collaborate, we want to define the next generation solution for consumer industries, and that also make us work very closely with customers, right, with our clients so that way when we create solutions, those solutions are going to have a landing with some of our clients because this is what they need. The second part is about helping our teams to make the solution available to our clients, right? I mean, we can create great things, but if the customers, they don’t know what they are, that is a problem.
Kevin L. Jackson (04:24):
Education is a big part of your job.
Jose Paredes Hernandez (04:26):
Education. Yes. And I need to educate our IBMers. I need to educate also the SAP sellers. And then, when the project actually starts, where we are deploying the implementations, I also like to be involved with the teams so that way they can deploy the solutions the way that we intended to do. Right? So, that means that it is a global role. It is pretty demanding, but, you know, I’m a workaholic.
Kevin L. Jackson (04:56):
[Inaudible] workaholic.
Jose Paredes Hernandez (04:56):
Yes. So, I have very early calls with the team in Europe, and then I finish at night with our team in Asia Pacific.
Kevin L. Jackson (05:04):
Wow. So, what prepared you for this? What background prepared you for such a broad remit?
Jose Paredes Hernandez (05:13):
Well, you know, I was born and raised in Venezuela.
Kevin L. Jackson (05:19):
Okay.
Jose Paredes Hernandez (05:20):
And I started my career in 1995, BWC. And after that I moved to Puerto Rico back in ’99, in 2003, IBM, both in the consulting divisions and after that I have been always close to the consumer industry, also through the retail industry, specifically, and that brings me the need for sharing the knowledge that I have with a lot of people globally. And I like it, you know? I love to be on top of what is happening in the organization, how we can help our clients to do what they need to do. And I do really care about them. Right? And that’s maybe what is bringing me to have those very hard-demanding timelines during the day. But from a rewarding point of view, I can see the organizations growing, meeting their goals, and also my colleagues growing and moving ahead in their careers.
Kevin L. Jackson (06:28):
There’s a lot of change that’s going on in this industry. In fact, you know, during the pandemic, everybody saw the empty shells, especially in the consumer space. I mean, you know, you couldn’t buy [inaudible] necessities in life. Right? Many organizations really learned hard lessons during that time. But in 2023 they’re still experiencing some of these shortages. Have we learned our lessons? What are the key supply chain challenges today?
Jose Paredes Hernandez (07:07):
Yeah. Well, Kevin, I think that you see it every day. I mean, you have to go to the grocery store, and you still can see the empty shelf. Maybe it’s more difficult to see it in the fashion industry, but sometimes if you ask for that jacket in a different color, they may or may not have it. Right? But you can notice this in an empty shelf that you can see in the grocery store because of [inaudible]. But if I try to give you a very good example, right, if we look from a food perspective, food is being done through a global economy, number one, and it’s a very complex supply chain process that is also global. Right? And what happened is, is in this global economy, when you have any specific event that happened anywhere, it basically is affecting the entire supply chain.
Jose Paredes Hernandez (08:09):
Okay. So, when we look into what potentially are those events happening that they are impacting, still the empty shelf, well, number one, so as an example. When we look from the geopolitical situation, right, we still have the war in Ukraine that is impacting all the products that they typically were providing globally. If we look for weak perspective, that is one of the key products that they are not able to put in the market with the agility that they have in the past, when we look the impact of fertilizers. Right? Their prices have been increasing and that have been making very difficult for a lot of people to actually buy and procure the fertilizers. And that, again, is impacting farmers because they are not able to continue to do the production that they were having before climate change.
Kevin L. Jackson (09:10):
Does this really argue against globalization? I mean, a lot of people, you know, leveraged offshore suppliers in order to, I guess, get more variety, be able to better support their customers, and now they’re suffering because of this offshoring.
Jose Paredes Hernandez (09:36):
Yeah.
Kevin L. Jackson (09:36):
Is that true?
Jose Paredes Hernandez (09:37):
Well, I think that, to be fair, we need to look back maybe 20, 30 years ago when we didn’t have the same availability of products that we can find today in every grocery store. So, I will say that globalization has been a good benefit for everybody globally. The problem is, we were not expecting this kind of disruption that we are facing today. And that is forcing us to rethink how we can have a hybrid model where we are still embrace globalization but we also have the capacity to secure some of the production in a more regional way or a local way. So that way, if something happens in China or in Brazil or Chile, we are not as heavily impacted as what is happening today. So, I think that we need to have a little bit of balance on this globalization process that has been beneficial anyway.
Kevin L. Jackson (10:40):
This is putting a lot of pressure on supply chain officer. Right?
Jose Paredes Hernandez (10:45):
Absolutely.
Kevin L. Jackson (10:46):
How are they dealing with this in today’s world? I mean, you as a consultant, you are talking to them every day. What’s your counsel?
Jose Paredes Hernandez (10:56):
Yeah. Well, I think that supply chain executive, they have been taking into account a way of trying to identify problems and minimize risk before they happen. Right? And the only way to be able to achieve those capabilities is through the use of AI automation, intelligent workflows. And to be quite honest, the [inaudible] chief supply chain officers are the ones that have already utilizing their operations. So, they are able to get more data inside from the supply chain and empower people across the supply chain [inaudible] decisions more faster and easily. Right?
Kevin L. Jackson (11:47):
Well, but the customers, they are expecting more and more next day, same day, next hour with respect to supply. You know, right now everybody expects the drone to drop everything right on their porch, you know, within 10 minutes of their ordering. Are the supply chain officers dealing with these expectations, heightened expectations?
Jose Paredes Hernandez (12:14):
Yeah. And the funny part is, maybe three or four years ago, everybody was, “Oh, wow. We weren’t able to get something on Sunday. Right?”
Kevin L. Jackson (12:21):
Yeah.
Jose Paredes Hernandez (12:21):
But yes, yeah, I think that from an end consumer perspective, you know, expectations are high and the competition out there is doing whatever is possible for them to do it. Right? And one of the areas where companies need to be able to make this happen is they need to start working more collaborative. Right? And they need to look at the process from an end-to-end perspective. There is not anymore the front office capabilities versus the back-office capabilities, because if we are promising, hey, are you going to be able to deliver this product in the next hour? There are a lot of things that needs to happen from the backend perspectives to be in place. Right? The warehouse needs to be able to work, transportation, or the last mile delivery need to be in line to pick up the products delivered then to the end consumer. And also, we need to have availability at the distribution center, right? So, companies are starting to rethink the entire process all the way from the design of the products, the manufacturer getting the supply chain in line, to get the products into the DC and then also from the DC to the end consumer. And sadly, there is a lot of companies that they are still working in silos. And that’s what we are trying to solve with the next generation of implementation where we are implementing S/4 HANA and the new SAP capabilities.
Kevin L. Jackson (13:57):
Well, you mentioned data. You talked about artificial intelligence. You also said people and silos. What does all this have to do with like digital transformation though?
Jose Paredes Hernandez (14:14):
Oh, well, all of those components are part of the digital transformation. Right? Because at the end, people are the one that is going to need to execute. Right? I don’t think – when we talk about automation and robotics, we are not going to replace human beings, right? We are basically adding new technologies and capabilities that will augment what people can do. If we look into – an organization is creating humongous amount data with too much value in there. But there is so much that we can do, and we can see actually from that data. When we look for AI and machine learning and foundation and data models, it is to help people to be able to identify patterns that could reduce risk or situation in the supply chain, and those are things that they maybe are not able to see. And then, you know, intelligence workflows also are working and helping us to be sure that people is connected. So, when one action happens, the next step will happen, and everybody understands the process or how the process is supposed to be executed. And also, the important part is it’s not just about the internal organization, meaning the different departments, it’s also the collaboration across all the suppliers that we have so that way we can work together and be sure that products are in the right place at the right time.
Kevin L. Jackson (15:50):
So how does like S/4 HANA help in all this? I mean, this is very complex.
Jose Paredes Hernandez (15:58):
Yes. Well, S/4 HANA is definitely a key enabler. Right? From a technology perspective, it brings capabilities that we didn’t have before in the legacy SAP ECC. It opens the door for better and easier way to integrate with other applications, and made information available from an inside point of view. Okay. So, S/4 HANA is going to continue being a very important component from the back-office perspective, but it needs to be very well integrated with all the other applications around it from the front office perspective, other application from the supply chain suppliers, and I don’t mean the suppliers that they provide raw materials or finished product, I’m talking about transportation companies or 3PA or some things like that. So, that integration layer that now allows S/4 HANA to make this easier and faster is one of the key elements.
Kevin L. Jackson (17:06):
So, it sounds like you’re talking about the entire ecosystem around a company and its operations. But this is not something that you can do overnight. What does this journey look like?
Jose Paredes Hernandez (17:21):
Yes. It’s definitely not overnight. There is an important component from a chain management perspective, right, if we look from a simple point of view, right? The user experience that S/4 HANA provides is definitely, a very good improvement from an SAP perspective, but it’s different, right?
Kevin L. Jackson (17:43):
Yeah.
Jose Paredes Hernandez (17:43):
So, people are going to need time to be able to understand how they need to do things, how they’re going to work, but the same thing is going to happen from the business process, right? And, what we are doing from an IBM perspective to help those organizations to make this process faster is we have our preconfigured solutions across different industries. Of course, we have one for consumer products, one for the retail industry, too. And that helped organizations to – whatever it was supposed to take 5, 10 years, 20 years ago, we’re able to do that between 6 and 36 months, depending on the size of the organization and, you know, their willingness to be able to move as fast as we can.
Kevin L. Jackson (18:30):
Wow. That’s fast. And, how do you actually do it so fast, this complex thing? I understand there’s, like, magic or key pillars to meet this like need for speed and implementation.
Jose Paredes Hernandez (18:47):
Yeah, absolutely. Well, first of all, a preconfigured solution always helps, right? When we go to our clients, we are focused on – this is the business process that we need to follow to achieve that speed from a business perspective, right?
Kevin L. Jackson (19:05):
Industry best practices.
Jose Paredes Hernandez (19:05):
Industry best practices, right? And then, we focus on change and we are able to do that because the technology is already preconfigured. Right? And then, yes, we always identify gaps or capabilities that they want to include, and that’s kind of like the 10 to 5% personalization that we allow to make that happen, especially for the physical life, right? At the end, this implementation costs money, they cost time, but it’s the time to market what is important. We want to be sure that we can start thinking about the other things that we need to have in place because of the customer demands, right?
Kevin L. Jackson (19:51):
Right, right, right. So, humans you mentioned were important, but right now and some think that the human element is being replaced by AI and you mentioned AI and the intelligent workflows. Are we replacing humans?
Jose Paredes Hernandez (20:11):
No. No. I don’t think that is the case. I think that the intention is to use technology to augment what people can do, right?
Kevin L. Jackson (20:20):
Okay. Okay.
Jose Paredes Hernandez (20:21):
I tried to mention before, you know, if you are analyzing big data, most likely it’s going to be very difficult to get patterns and things like that. Only you are one of those beautiful minds that we can see things that we cannot, right?
Kevin L. Jackson (20:35):
You got all this pain floating in your head. Right?
Jose Paredes Hernandez (20:37):
Exactly. Exactly. But people are important and we want to, in some cases, refocus what people are doing so that way we can focus more on personal customer experiences. Right? And maybe something that is very repetitive and doesn’t add too much value to the organization is you can take that out from you and then you can take, hey, this is the actual information that I need to take actual decisions. That’s what we are bringing into the table. So that way people maybe needed three days to be able to take a decision, now they can take those decisions in 5, 10 minutes because they have the data available for them to make it happen.
Kevin L. Jackson (21:26):
So, if I’m focusing, I’m leveraging AI so I can do business faster, so I can have better margins, and I can better manage my supply chain so that I can have the supplies that I need, what about sustainability though? Do the chief supply chain officers – is that like just a nice to have?
Jose Paredes Hernandez (21:50):
Well, I will say definitely no.
Kevin L. Jackson (21:54):
Okay.
Jose Paredes Hernandez (21:55):
Right? I think that from an end consumer perspective, right, we think from that point of view, they still want the right prices, they still want the right quality, they want their products faster, but now they’re also thinking on values, right, what is important for them. A lot of customers are still focusing on health, right? Everything that happened, the pandemic opened a new point of view, and they’re also looking on, “Hey, you know, this is our planet and we need to be able to protect it going forward because the newer generations are going to pay the price.” And with that in mind, you know, organizations, they’re investing in sustainability, they are taking, a higher writing from customer loyalty, right? And that is important, right?
Jose Paredes Hernandez (22:54):
So, from the end-consumer perspective, from that angle, it’s super important to still continue doing that. And the other point of view is governments around the world that are also implementing regulations and company need to start providing information and reports of how sustainable they are. So, customers that they are not doing anything today, they’re going to have to start paying penalties or taxes or other implementation that governments are going to have, right? So, I think that not only the supply chain executives are looking into this, I will say that all the C-suite is seriously considering doing a lot of things from a sustainability perspective.
Kevin L. Jackson (23:41):
Well, we started off this conversation talking about some of the history and the fact that all these supply chains broke because they were too brittle. Where does resilience play? Is it just too brittle to have these outsourced global links? How does, you know, the chief supply chain officers create, build and sustain, in a sustainable manner, a resilient supply chain?
Jose Paredes Hernandez (24:13):
Yeah, absolutely. Well, I think the few steps that they need to do to make, to embed resiliency in the supply chain, is number one, I think that they need to, in every decision that they’re taking going forward, supply chain needs to be part of the conversation. It’s no longer about what I want to do from an end consumer perspective, from a B2B or B2C, or how I am producing the products. Supply chain needs to be always in the heart of those conversations so that way you can create end-to-end business processes. The other key area is today’s sustainability has one important component. Everything that we do, depending of the angle that we are taking, is going to help us to create some sustainable ways of doing it and make it more viable for the planet and for the products that we’re producing.
Jose Paredes Hernandez (25:15):
The other area that is really important is the extended collaboration and trust across all the different players in the supply chain internally and externally. Companies that are not considering their partners or the suppliers’ strategic components of the supply chain, they are putting their organization at risk and their reputation at risk.
Kevin L. Jackson (25:46):
Okay.
Jose Paredes Hernandez (25:46):
Okay. And I will say finally that it is important that they consider the adoption of technologies or the intelligent technologies to support all the activities across the supply chain. As I mentioned before, AI is a very important component to provide data in size and make agile decisions to reduce risk and identify situations that could happen, right? And then, the other area from a technology perspective is to provide intelligent insights, information to humans so that way they are also able to identify situations and also to empower them to take decisions and actions in timely matters.
Kevin L. Jackson (26:37):
Wow. Fascinating. You’re really giving us some great insight into the consumer industry and how in intelligent workflows can really support digital transformation. I know you have a very busy schedule this week, and I really appreciate you coming and spending some time. How could people reach out to learn more about how IBM and SAP really work together to support the digital transformation of their customer?
Jose Paredes Hernandez (27:08):
Yeah. Well, absolutely. For the next two days, I’m going to be in the IBM booth so they can find me over there if people are watching this conversation in the next two days, but they can definitely get more information at ibm.com. They also can look into my LinkedIn profile and there is a lot of information, and of course, they can send me a message through LinkedIn, and I will be more than happy to reach out to them and have a conversation about it.
Kevin L. Jackson (27:41):
Thank you. Thank you very much. With that end, we’re going to end another episode of Digital Transformers. I’ll tell you Jose and his team are really transforming the consumer industry marketplace with SAP leveraging AI in order to enhance the human in this entire process, focused on sustainability and resilient supply chains. So, thank you very much, and we’ll see you next time on Supply Chain Now and Digital Transformers.
Intro/Outro (28:17):
Thank you for supporting Digital Transformers and for being a part of our global Supply Chain Now community. Please check out all of our programming at supplychainnow.com. Make sure you subscribe to Digital Transformers anywhere you listen to or view the show, and follow us on Facebook, LinkedIn, Twitter, and Instagram. See you next time on Digital Transformers.
