Supply Chain Transformation and Innovation

Michael Krigsman: We're talking about supply chain transformation and leadership with Allan Dow, President and CEO of Logility. Allan, tell us about Logility and about your role.

Allan Dow: We've got, actually, five decades of experience. As the supply chain has evolved and matured over the years, we've been evolving with it.

We are recognized as one of the leaders in understanding what the challenges are in today's marketplace and helping our customers overcome the challenges that they face. We're deep experts in this area of supply chain capabilities, helping our customers actually operate sustainable supply chains and really understand what's going on in the marketplace so that they can serve their customers extraordinarily well.

Supply chain transformation

Michael Krigsman: Allan, why has supply chain come to the fore during this past year, and what makes it so complex?

Allan Dow: Really, the supply chain has been at the fore in some segments of the business for the decades that we've been in business with them. All of us, as consumers, have come to know it much better because we've gotten closer to the supply chain. As a result of that, the executives, with our customers, the people who are the brand owners of the industries that serve us as consumers, have really become aware of what we need and our expectations – and they've changed over the years.

If you think about many decades ago, for instance, if you were ordering a piece of furniture, we were very complacent and willing to wait a long time to have that furniture delivered to our homes from the time we ordered it. Today, we have very different expectations as consumers.

Furthermore, companies have a new responsibility for making sure that the things that they do in the industry, the supply chains that they operate sustainably, that we have consideration for human capital usage, and that we're delivering both on the customer expectations from what products we have available, but also how we go about achieving those objectives of serving the customer needs.

Supply chain planning and customer expectations

Michael Krigsman: Allan, what has the implication been for supply chain management of this shift and change in what consumers demand?

Allan Dow: Well, at the same time that we've had this shift in consumer demand, supply chains have become far more complex. If we think about some of the industries we're very comfortable with – I spoke about the furniture industry as a for instance – in decades past, the furniture industry, all the furniture that we bought (in North America, for instance) was made in North America. The supply chains were relatively short. People had access to them and you could understand them.

Today, virtually every supply chain that's operating today has some element of a global nature to it. There are many elements of the supply chain that are just unknown. They're outside the control or knowledgebase of the executives.

At the same time that the consumer expectations were going faster and faster and faster, the complexity of the supply chains went longer lead-times, they went more global, they were less well-known, less well understood. The complexity converged with an urgency and it really made it a very complex business operation to keep in control.

Michael Krigsman: Complexity merging with urgency, what has that meant for executives managing supply chains?

Allan Dow: The complexities have been there for some time now, but what this last year in the pandemic really brought to the forefront is a lack of control. They didn't really understand where all the complexities lie. They didn't understand the bottlenecks that were existing in their supply chains. They didn't understand the limitations or maybe how slow it is. They really lost track of the latency of data around making the decisions.

That's what we've really been focused on in the last year. How do we bring that all together for them? How do we make sure that, at Logility, we're putting in, at their fingertips, the information they need to make the right decisions to live up to the commitments they've made around their brand promise.

Michael Krigsman: Allan, give us some examples of some of those data sources.

Allan Dow: Some of the data sources could literally be just about where the consumer demand is heading, so that's the short-term forward-looking data sources. Other elements of the data source could be really complex like where is the source of the raw materials. Where were the raw materials produced or maybe grown (if they're organic)? How were they processed? What factories did that? What labor content went into each of those elements? How did that flow throughout the supply chain so that they have a real understanding of all the capabilities and what's been touching their products and what the source of those products came from?

Digital transformation in supply chain

Michael Krigsman: Allan, digital transformation has become an essential part of many business operations. Where does supply chain intersect?

Allan Dow: Really, today's operations around the supply chain are going through a digital transformation as well. When companies speak about digital transformation, oftentimes they're thinking about how they take the order. How do I capture that information?

As you step into the supply chain, it's, how do I digitize the design of my products? How do I digitize the information about what elements go into the bill of materials? What makes up the product? How do I digitize the information flow of where the product was sourced from?

Even more important is, how do I build a digital model of my supply chain so I can simulate certain conditions? Can I simulate a disruption? Can I simulate new product introductions? Can I simulate the sunsetting of products that have been in the supply chain for some time-period? Can I simulate customer demand that's going to either explode or maybe slow down?

All of those are aspects of making the decisions that allow me to align my supply chain to current market requirements and my commitments to the consumers. As soon as we build that digital model and that we enrich it with the data set that comes from the supply chain, now I have at my fingertips all the information I need to make those strategic decisions very quickly and very effectively.

Michael Krigsman: In manufacturing, there's this concept of the digital twin. Can we almost call this a digital twin of the supply chain?

Allan Dow: Precisely. It is a digital twin of the supply chain. The digital twin is the representation of the network and the data that combines with it to really represent what's happening in real-time in a digital world so that I can look at it, I can understand it, I can see my bottlenecks. It'll alert me to conditions that are out of control and also give me predictions and recommendations on how to resolve those issues.

Using digital twins to create resilient supply chains

Michael Krigsman: I think underlying much of what you're saying is providing a business or competitive advantage as a result of robust, resilient supply chains. Would you shed some light on that for us?

Allan Dow: There are a couple of examples, I think, that really shed the light on it.

Over the last year, as we went into the pandemic, we had some of our customers that were in the medical products field. The orders were flooding them. They had more orders than they could possibly meet. By having the digital twin and building out what that model looks like, they were able to sense and respond to where the real needs were, not just the orders or requests for information.

Another example of leveraging the digital network is to think about customers had products that got bottlenecked when ports shut down, when people couldn't move product across borders. Having the digital twin allowed them to assess their current supply chain, take advantage of the inventory that was in movement, that was maybe locked up somewhere, and redeploy it to other areas that allowed them to move, sense, and respond. Those who didn't have a digital twin got stuck with the inventory in the wrong location or an inability to respond to the real market demands that needed some of those products.

Just a couple of examples of where the digital twin really plays out.

Michael Krigsman: Allan, we hear that phrase a lot, "resiliency," when it comes to supply chains. Break it down for us. What do you mean by that?

Allan Dow: Michael, I think I could best answer that through an example. One of our customers, Tillamook County Creamery, as we went into the pandemic, really had an opportunity to leverage their supply chain in a way and capitalize on a bigger market need. Many of us probably saw that we were having shortages for ice cream, for cheeses, for dairy products in general (on some of the product shelves).

Tillamook was able to respond to those market requirements. They shifted their supply chain. They moved from institutional manufacturing product sets and they moved to consumer-based product sets. They were able to push our product and meet demand the way that no other dairy product company was able to do deliver on.

Today, as a result of that, because of the resiliency that they had in their supply chain, their ability to sense and respond to new market demands, you are probably seeing those on all of your customer shelves as you go out to the grocery store today. You're seeing a name that you may not have seen before.

Tillamook: If you haven't seen it, go look for it. It's a great set of products.

Michael Krigsman: How did they accomplish that resiliency?

Allan Dow: We had a partnership going on with them where they were really thinking differently about how to run their supply chain in an efficient way. They set up that digital network so that they could actually sense and respond, look at what their manufacturing capacity was, look at the consumer demands that were coming at them, and match those two up so that they were able to start producing the products that were in demand and then push them into the marketplace where consumers needed them most.

Robust supply chains and sustainability

Michael Krigsman: What are the characteristics of a robust supply chain?

Allan Dow: A robust supply chain is one that understands the market needs and is able to respond to disruptions. Robust supply chain may take multiple dynamics. It could certainly consider a good understanding of what the potential market demands could be, and that way I can respond to those.

A robust supply chain also has the ability to surge capacity, to overcome a spike in demand. But a robust supply chain also has the ability to flex and move in a way that might overcome a barrier that currently exists in the supply chain or a disruption that might occur as a result of an environmental condition, some sort of political trade issue, or just a labor shortage or some other disruption that might occur out there.

All of those come into play as part of a robust supply chain.

Michael Krigsman: Allan, you've mentioned the term "sustainable supply chain" several times. Tell us about that.

Allan Dow: Yeah, it's something I'm very passionate about and all of our teams here at Logility are very passionate about as well. Sustainability hits three different factors for us when we think about sustainability.

One is the area that really traditional supply chains talk much about. How do I manage the inventory effectively? How do I make sure that I use my supply chain in an effective way? How can I efficiently get product to the market to service my customers? That's part of sustainability and making sure I can understand and run an economically viable supply chain.

Another part of sustainability is around the products and the impact on the environment that I may have. When we think about the environmental sustainability element, it's what kind of effluence do I have. How much energy to do I consume in making the products and in moving the products? How much packaging do I have around the products and is that packaging material recyclable?

The third leg (equally important as the first two) is around the human assets of the supply chain. Am I making the world a better place for people to work? Am I using labor in a proper way?

For us at Logility, all three of those legs make up the stool and we have to make sure we have a balance on all three of those, that we're attentive to those, gathering information, and running a sustainable supply chain in that way.

Advice on supply chain transformation and innovation

Michael Krigsman: Allan, we've spoken about a broad range of supply chain activities. How does a company embark on this journey?

Allan Dow: Getting started means really just getting started. Whatever phase they are in their supply chain—however sophisticated or unsophisticated they may be—is to really roll up the sleeves and get going.

At Logility, because of the depth of knowledge we have and the time we've had in the marketplace, we actually can bring an industry perspective to every customer that we work with. We have a recommendation on how to run an efficient supply chain, how to transform the business model in a way that supports today's requirements, and we'll share that perspective.

We'll give them a roadmap for going forward. What can we do in the first six months to drive value? Then how do we put a sustainable operation in place that will evolve over time and grow with their demands and their capacity to take on new capabilities? Really start to deliver on the sustainable supply chain and live up to their consumers' expectations of their company.

Michael Krigsman: You speak with a lot of companies that are transforming and innovating around their supply chain. Are there common challenges or patterns that tend to emerge?

Allan Dow: There are very common patterns, but the number one common challenge faced out there is the latency of data, the lack of information necessary to make the right decisions, and getting your hands on that and be able to react to those decisions very quickly. We're building those digital networks today that will allow our customers to actually understand what's happening, make real-time decisions, and act immediately upon those decisions.

Michael Krigsman: Any final thoughts or advice on supply chain transformation?

Allan Dow: Supply chain transformation is a very exciting area, Michael. I truly believe that as we go through this with our customer community, we are building sustainable networks that will allow our customers to have a dramatic impact on the world that we live in and the lives that we live today.

We're improving the world for all of our customers and the communities at large and making it a much better place. I'm excited to be in the supply chain space. I'm excited to help our customers deliver on those promises and look forward to the future that we're going to bring to a much better world.

Michael Krigsman: I love that concept of sustainable networks. Allan Dow, President & CEO of Logility, thanks so much for speaking with us today.

Allan Dow: Thank you, Michael.