Supply Chain Technology: The CIO’s Perspective

Details #

In this episode, hosts Karl Siebrecht and Ben Dean engage with Diane Randolph, a retired CIO and Retail Technology Executive, and Jonathan Salama, Co-Founder and CEO of Transfix.io, to discuss the evolving landscape of supply chain technology. Diane shares insights from her extensive experience in retail, emphasizing the importance of digitization, end-to-end supply chain visibility, and balancing competing goals like cost, speed, and sustainability. Jonathan provides a perspective from the transportation side, illustrating how automation and data-driven tools enable faster, more adaptive supply chains while preserving critical human relationships.

Key topics discussed:

• The impact of digitization on supply chain efficiency, cost management, and sustainability

• The challenges of integrating new technologies with legacy systems in supply chain operations

• The role of automation and AI in reducing human error, optimizing processes, and improving decision-making

• The importance of people and relationships in maintaining operational excellence alongside technological innovation

Additional Resources:

• Follow Diane Randolph on LinkedIn
• Follow Jonathan Salama on LinkedIn

Logistics Leadership Podcast legal disclaimer

Episode Transcript #

[00:00:00] Announcer: Welcome to the Logistics Leadership Podcast brought to you by Flexe. Flexe provides Flexible Warehousing Infrastructure, helping enterprises optimize their supply chains with flexible solutions through North America's largest network of warehouse operators. Enjoy the show.

[00:00:24] It's the Logistics Leadership Podcast with Karl Siebrecht and Ben Dean.

[00:00:31] Karl: Welcome back to the Logistics Leadership Podcast. I am Karl Siebrecht, your host. Ben Dean, great to see you, as always.

[00:00:38] Ben: Yeah. Great to get with you on this podcast again, Karl. What's our subject matter today?

[00:00:43] Karl: So today we are going to focus on technology and the way we're going to do this is to start, we're going to get the perspective of the CIO of the enterprise.

[00:00:55] So what's obvious to all of our listeners, most of whom are supply chain execs, whether on the planning side, the execution side, or both; what's obvious is that the role of technology and supply chain has become more and more and more important over the past five years, 10 years, frankly, even going back 20.

[00:01:12] Okay, so we wanted to understand the perspective of the leader of the technology organization inside the enterprise to try and understand a broader perspective of the role of technology and how that decision influencer, or in many cases decision maker, can help us be more and more successful at building supply chains.

[00:01:35] So I'm going to speak with Diane Randolph, who is a veteran CIO, who has worked for decades in a couple of leading retailers, Reitmans, a Canadian retailer, and Ulta Beauty, the cosmetics company here in the U.S.

[00:01:50] Ben: That sounds like a great conversation. And as Diane well knows, retailers and shippers don't achieve these supply chain initiatives on their own.

[00:01:57] They go to third party solutions providers, whether that's 3PLs, transportation, or standalone technology providers to achieve those ends. So I was able to get a conversation in with Jonathan Salama. He's the CTO and founder of Transfix, actually CEO now that they've switched from becoming a digital brokerage to be more of an orchestration layer on behalf of other brokers and shippers.

[00:02:21] So I think he's going to give us a really great perspective on how technology creates value and supply chain on behalf of shippers.

[00:02:28] Karl: Great. So let's dive in. I am very pleased to welcome Diane Randolph. Diane, welcome to the podcast.

Diane: Thank you, Karl. I'm thrilled to be here.

Karl: Let's start, if you don't mind, if you can just tell us about yourself and your background.

[00:02:43] Diane: Sure. So I've been fortunate to spend my entire career at the nexus of retail and technology first as, in the development side of a solution provider that did a full suite of solutions for medium sized retailers, including warehousing and logistics and planning and merchandising and the usual suspects. And then I moved on to the other side of the equation, if you will, and worked for those two amazing retailers that you mentioned.

[00:03:11] And it was really an interesting contrast to see, you know, from the producer to the consumer, of that element. But retailers fascinated me. As an industry, you're so close to the customer and really understand what's going on in the minds and hearts of the entire population. So it's fascinating to me, couldn't be happier.

[00:03:31] Karl: Yeah, well, I'm again, super excited for this conversation. You know, you pretty much can't read an article about supply chain, that doesn't have either a mention of, or more often, almost the whole topic built around technology. And I recognize of course, as a CIO of a large retailer, technology spans from HR systems, financial systems, retail systems, right?

[00:03:55] But supply chain sure seems like it's been one of the meatiest areas for evolution and specifically on this journey of digitization. Although maybe you'll be able to check me on that because, of course, I spend most of my time in supply chain. So that's what I see and read about. But just as a couple of examples, you know, McKinsey is writing consistently about supply chain digitization,

[00:04:22] KPMG, you can go on down the list. Specifically, there was a recent survey done in Gartner supply chain, and it asked retail executives, what are the top three supply chain initiatives in your company? There were 13 answers, 10 of them were centered around technology. So is that a good way to think about it?

[00:04:44] From the CIO's perspective, was more of your bandwidth spent on supply chain technology than other areas? Or is that just what I see from my specific point of view?

[00:04:53] Diane: No, you're right. That is a huge focus. In fact, in some cases you'll find CIOs who have gone on in their career progression and taken on also the responsibility for supply chain because it's so important for CIO to get that really deep understanding.

[00:05:12] You know, before it was a, the term digitization is, I always joke about it a little bit because I said, if it's not digital, it's analog and what's analog, right? So, you know, so, but the first time I really got knees deep into a supply chain transformation was for the first retailer I worked for, which was Canada's largest specialty apparel retailer, who was looking to really shave valuable scarce time off the flow of fashion goods from concept to the stores.

[00:05:49] Including obviously online, but it was really to cut that time from, you know, longer than it takes to make a baby to something significantly shorter than that. So, and as part of that, I traveled to the actual factories in China to see, you know, what actually happened at the very start of the process.

[00:06:08] I knew from, you know, our internal organization, what design and concept look like. But once those specifications were sent off to the factories, what happened? And what was going to be realistic, in terms of trying to automate and digitize the flow of information? And that really just taught me so much because

[00:06:29] you know, saying supply chain is tactile is an understatement, right? Because it's all about physical handling of things, the conveyors, the movement of merchandise, the movement of people. And there's just so many intricacies that technology, you know, going back from, you know, early days of just automated sortation, you know, can make a massive difference.

[00:06:52] And now there's just so many more capabilities that can be brought to bear on what is one of the most critical assets and differentiators of an organization. And also one of the biggest cost areas. The price tag on those investments is significant, right?

[00:07:09] Karl: Let's take that example and kind of dig underneath it a little bit.

[00:07:13] So, in that particular case, looking to shave time off the, effectively the manufacturing process, broadly defined, underneath that, what was the primary business objective? Was this a cost issue in shrinking the cycle time? Or what was it?

[00:07:33] Diane: No, it was really because, you know, fashion, if you go way back, you know, fashion used to happen twice a year with fashion weeks, right?

[00:07:40] And then the customer was always so far behind those cycles that retailers could take their time to produce the goods that was inspiring them to serve their customer based on what they saw at, you know, Paris fashion week or the like. But that changed, right? With the rise of the internet and the availability of information, customers were seeing things and one of them right away.

[00:08:02] And then of course you had the advent of fast fashion, the H&M’s and the Zara’s who add, you know, dealing in a European base with a different geography challenge were able to get that fast fashion. So it was that competitive pressure. It was really profitability, because if we didn't get the goods in the store quickly enough, even if we hit the right mark on what our customer wanted, it was too late.

[00:08:25] And we were looking at selling it at a markdown and losing gross margin.

[00:08:30] Karl: I see. Got it. So it was more of a, you know, revenue based issue.

[00:08:36] Diane: Exactly. Yeah.

[00:08:36] Karl: And so. Okay, so then projecting out from that, broadly speaking, as you've experienced, supply chain digitization efforts, knowing that that's a bit of a general category, the underlying business objectives are some mix of,

[00:08:54] cost savings, growth, as you described here, is there any kind of particular hierarchy that you have seen in those business metrics? Or are they really all up for grabs?

[00:09:07] Diane: Well, they're all up for grabs, but I do think the big challenge is managing what are often competing goals, which is speed to guest,

[00:09:18] or your stores, speed to its destination, goods to the destination, at a manageable cost, right? What is the cost to serve? Because you can pay for air freight, let's say to get an order from China, but that's not sustainable. And then the third, which is a more of an emergent need is to, you know, try to deliver on your, you know, carbon commitments, right?

[00:09:40] And sustainability initiatives and reducing stem miles and the energy consumption across that whole spectrum. So you've got to balance, right? You can't be the fastest and deliver on those other two. So you've got to decide what, where the, where you want to sit in that equation.

[00:10:00] Karl: There you go.

[00:10:01] Okay, that makes sense. So, is there any way that you could characterize or summarize the nature of the top challenges that you have experienced, either directly or through companies that you've advised or otherwise been involved with? What are the top challenges that a supply chain organization specifically must go through

[00:10:26] to evolve the technology stack?

[00:10:29] Diane: Well, you've got to make sure that it is appropriate for your labor source and labor pool. You know, in a retail context, you know, you're dealing with, on the logistics side and the supply chain, and in your distribution centers, you're dealing with peaks and valleys that cause you to use a lot of temporary labor.

[00:10:53] So you get the temporary labor in, they're not familiar with the processes. They have to be pitch perfect or you're going to create real challenges for yourself in customer satisfaction and costs and other things. So there's that dilemma. It's very difficult to test it. And, you know, you're also talking at the other end, like in a retail store situation, you know, what's optimal for the four walls of a distribution center may be terribly suboptimal for the stores who have to open and, you know, and put away and display all of that merchandise.

[00:11:35] So again, you've got to get that balance right about the efficiencies, which is why I think one of the trends that I think we're starting to see is that there's more focus and there should be even additional focus placed on really making sure that people understand that end to end supply chain, when they're responsible for making these process and you know, how the, all these, intricate flows of merchandise, flows of product, within that four walls, you know, historically, the VPs or heads of supply chain were often really looking at their four walls, and maybe just the initial, you know, goods coming in and the truck going out, but then it really belonged to another part of the organization, but you can't do that and be effective, right?

[00:12:27] You've got to understand, one of the boards that I'm on now is on a huge project, very expensive and very, you know, it's going to have a long rollout to get to all of their distribution centers, is to really make the merchandise floor ready, because, you know, you think about the costs and the issues in trying to get store staff to, you know, unload a trailer

[00:12:55] that's not necessarily where each box is a mixture of things. In the interest of learning how everything works, when I took the position at Ulta Beauty, I was fascinated by the fact that they could set up a brand new store, of which they opened a hundred a year in those days, in a really relatively short period of time from the time it was

[00:13:19] turned over by the landlord. And so I wanted to see what that floor setup was like. And it was pretty challenging. You know, I was working the haircare section and you know, there was, okay, where does this one go? And then it's got to be fully beautifully lined up, you know, and the OCD in me came out a little bit that I have to go back to the sixth one.

[00:13:39] I mean, it's not trivial. And the fact that I was running aisle to aisle, shelf to shelf didn't make it any easier, right? Because if, you know, if it had been done a little bit differently up front, it could have gone even, even more smoothly.

[00:13:53] Karl: Right. Right. So, playing that back a little bit.

[00:13:56] So there was one set of challenges around really developing an end to end perspective.

[00:14:01] Diane: Yes.

[00:14:02] Karl: And breaking down the functional, oftentimes functional silos within an organization, is one of the challenges. Another one, I heard you were talking about temporary labor as an example. But it was, maybe almost the design or the UX or the UI,

[00:14:21] the experience of the technology has to be tuned correctly to the users, is another challenge, which is, as you know as a CIO, it's a classic challenge across any kind of technology in almost any environment. On the first one, the organizational silos, can you share any advice or wisdom around best practices for getting beyond those silos?

[00:14:49] Is that an org design lever that you pull? Is it a, just find the right, highly collaborative C level leader? What are some of the pointers there?

[00:15:02] Diane: Well, I would say that, you know, the effort, I think, you know, many people go into it with a collaborative mindset and with a desire to really do the right thing across the organization.

[00:15:15] But it is very difficult to visualize, in some cases, these operations that they're talking about, either the picking or the packing in the warehouse or the unpacking in the store. So having, you know, your leadership team, you know, Mary Dylan, when she became CEO at Ulta Beauty, one of the first things she did, I think in the early days, was she went to a store and unloaded a truck, you know, at five o'clock in the morning.

[00:15:43] So, I mean, I think every, you know, leadership team who's involved, who touches supply chain, and that's everybody, really needs to be on the ground and actually see it happen or do it themselves for, you know, a day or an hour, to understand what they're asking for.

[00:16:03] Karl: Right. No substitute for getting out in the field.

[00:16:05] Diane: Yep.

[00:16:07] Karl: Can you speak at all to, there's a term that you've used that I have borrowed from time to time where you have described the jungle of systems that exist in some of these large and successful tenured organizations, right? There've been technologies deployed maybe decades ago, some of which are still in place and they're

[00:16:35] you know, used day in and day out and vital for the operation, but collectively and over time, this can start to look like a jungle of systems, which can present a challenge in the effort to roll out new systems. Hopefully I'm not exaggerating too much what I've heard from you. You share that perspective.

[00:16:56] Could you just shed a little light on that?

[00:16:59] Diane: Sure. Well, you know, when you're talking about supply chain, you're talking about, you know, inventory, and that's the greatest financial asset that sits on the books of any of these companies, right? So it's got to be right. So how do you do that in, you know, a real time, you know, almost if you look at it today as it would be a microservices API first, but most of these systems, SAPs, the ERPs of this world, payroll systems and the like, are not built for that.

[00:17:36] So how do you think about putting something in the middle that is going to be auditable because again, you know, you're talking about inventory. You've got to make sure that your auditors are happy with, you know, auditing the financial records, let's say inside the ERP, and aren't going to go sit in a warehouse, you know, every year.

[00:17:59] And there are controls that need to be exercised there, but you don't want your WMS system to be inside of scope for SOX compliance. That would really be a rather large headache that no one would really want to take. So, thinking about how it is actually designed, regardless of what technology you have to use, right, you may be forced to use older methods

[00:18:21] if the systems behind that are of that era. But it's a challenge from, you know, a design perspective. And, you know, because integration always ends up to be the long pole in any tent, you know, there's a tendency and nobody understands it outside of the technology organization. Like, oh, you just plug two things together.

[00:18:41] I plug a light and it works, right? Two systems together. And so, you know, really, because it's misunderstood, there's often a pressure to kind of speed it up and that never ends well. Now I will say that with the rise of more modern order management systems, which now become the hub, it's simplified it a little bit because that's kind of sitting in the middle of everything.

[00:19:08] And you don't have to think about being, you know, an element in the supply chain that's talking to six or seven different systems. Generally speaking, you're talking there to the order management system and you know, managing it.

[00:19:22] Karl: Okay, got it. The order management system is kind of like a nexus or foundational part of the stack, more so now than in the past.

[00:19:31] Diane: Correct. Yes.

[00:19:32] Karl: One other thing to pull a thread on, you had mentioned as one of the challenges, it can be challenging to test systems. This is somewhat related, this question is somewhat related to that, but could you talk a little bit about the pros and cons and the practical realities of trying to test and learn with new systems versus, you know, the need, at some point, to make big investments and big transformations and just from a CIO perspective, like, how do you navigate that? You got big bets that come with some risks and typically can take time and, you know, maybe a desire to want to test and learn and be nimble.

[00:20:26] Can you just shed some light again on the practical realities of what you've experienced in that domain?

[00:20:33] Diane: From what I've seen, and again, it's because, you know, there's nowhere, I always say that you can't have a technology solution obviously stand on its own. It's always people, process, and systems, in that order, right?

[00:20:45] And so there's no place where that's truer than in, you know, a typical distribution center where you're talking about, you know, miles and miles of racking, miles of, you know, conveyors, you know, automation, there might be sortation, there might be, you know, automated receiving and other goods to person technologies, robots in a more extreme case.

[00:21:10] It's easy to design one of those things on paper and even validate maybe with some peer companies that have implemented those technologies. But I've never seen anybody really be able to test it on a portion of their business in a portion of a building, right? Typically these new technology advances are usually done in a brand new building, which starts from putting the, you know, the shovel in the ground and building the damn thing, right?

[00:21:48] So it's a multi-year process to get to the point where you can even test that idea that you had on paper. That's why, you know, I find, you know, the concept of digital twins fascinating. I mean, to me, it's almost a little bit, I have a little bit of doubt about how it really could work, but if it could, that would be, you know, brilliant.

[00:22:12] And really with AI, there's an opportunity, you know, given that, you know, there's so much low level data captured in all of these current systems today, if you were thinking about modeling something brand new, I think you'd have a lot more than just gut instinct and experience, right? To try to do some forecasting on what things might look like and potentially then be able to do some, you know, potentially unit, well, not unit testing, but some, you know, some testing of some new thing, whether it's a sensor, whether it's a, you know, some piece of automation, because automation, I think, is going to be the key, trying to reduce steps by humans, trying to reduce errors by humans, and trying to get that cost down and that efficiency and that speed. But how could you really validate that before, you know, going to your CFO and asking for a huge check to achieve that? You'll never be able, that you won't be able to really validate for years, right?

[00:23:21] Karl: Years. Exactly. Now that investment was built around a long term forecast. It needed to be, the ROI was based on that. The investment decision was based on that and the results to see if the ROI bet paid off or not is going to be years, in many cases. I'll tell you, you know, to your comment about digital twins, this is something, this is, I would put it on my personal top three interest list and something that I

[00:23:46] keep my ears open for and have heard it called in the last 12 to 18 months, significantly more from our customers and other enterprises in the industry that I'm hearing more and more frequently that companies are finding success with this and seeing that these digital twins deployed in various ways across organizations are actually delivering results.

[00:24:08] Have you seen any of that shift in the circles that you trade and travel in these days or not yet?

[00:24:16] Diane: No, I haven't yet. But it is something I'm going to continue to watch.

[00:24:20] Karl: Great. And related to that, you had mentioned just a couple of minutes ago, if there's an opportunity

[00:24:27] to get insight from colleagues outside of your organization, their experiences, kind of the networking group, that can be one of the ways to try and mitigate risk of rolling out and trying new things. Can you speak to any organizations or networking groups or venues that you've found success in in that regard?

[00:24:49] Diane: Well, you know, I have always really enjoyed my membership in the National Retail Federation CIO Council. About 150 members and, you know, about half of that are extremely active and they really are very open to sharing. Now it was interesting, when I was at the Canadian retailer and we didn't, we had a small presence in the U.S. but it was really not major and a little bit in Europe.

[00:25:17] So we got a lot of people who were, you know, really anxious to talk, would be more than open to talk to us who, you know, if I had been a U.S. based retailer, there would be no way because we would have been in the same competitive set or similar competitive set. So it is tough to find the right people who will open up.

[00:25:37] But even at Ulta, we were able to do that, you know, trying to look at maybe sporting goods, other things that, you know, had similar makeup to the kind of SKUs that we were dealing with and the kind of volume we were dealing with. So for a CIO, I got most of my networking from that NRF CIO network.

[00:25:55] The supply chain leaders have a really strong group in RILA, you know, and I think they do share information. Because, you know, it's a hard space. There's a lot of experts out there. There's a lot of advisories, but, you know, there's a lot of them that have either a horse in the race or they have money on a horse in the race.

[00:26:18] You always have to wonder, you know, how am I going to really see it for myself and feel comfortable that I'm getting an unbiased opinion.

[00:26:25] Karl: Definitely. So let's talk about specific technologies or at least categories of technologies that are either emerging today or have been emerging over the past few years.

[00:26:36] What are the most impactful supply chain technologies out there that you think companies should be looking at today if they're not already?

[00:26:46] Diane: Well, I think really it's the right kind of automation from the point of view of getting the product to where it needs to go to be packed or shipped or whatever its journey is without a lot of human steps, human touches, room for error, right?

[00:27:05] And some of those have been around for a long time. You know, so you've got, you know, ASRS, you know, those systems have been around, but you're seeing now, I guess maybe it's point of view of the cost coming down a little bit or the cost of labor rising to the point where it now becomes a lot more, you know, sensible.

[00:27:28] And then really with sensors and robotics, you know, I've seen, at least in some innovation exhibits, you know, really some great tactile robots that can really do a lot with fine merchandise to try to pick it. That's the other thing that I think data and AI can provide is that because of the labor force challenges I mentioned, and because just, you know, and again, goods might have come into the warehouse mismarked, right?

[00:28:01] Maybe it was a problem on the supplier end. You don't want to find out about it when it arrives at your customer's house when they've ordered it online and they find out now you've got the wrong product. And so retailers have always had a long history of figuring out what the right based on like industrial engineering concepts, like where are the points where they should do spot QC checks and you know, based on the sampling size, et cetera.

[00:28:23] But I think AI really allows you to look much more closely at what are the operations that really are the ones that drive most of the quality issues? What are the shifts, the actual, maybe the associates involved? What are the steps so that you could really focus on what's important and, you know, number one, so you want to catch it, but you also want to prevent it.

[00:28:47] So, where are your problem spots? You know, because again, right now you only know sometimes when the customer gets the wrong piece of merchandise. But where did that start? Where did it happen? Being able to really use AI to do that better.

[00:29:01] Karl: Would you consider that a visibility, supply chain visibility tool set, or how do you think about that?

[00:29:08] Diane: Well, I think about it really as, yes, it's visibility, but I think it could be much more prescriptive than that, where it could, you know, really point out here are the problem areas. Now, then you have to dig in a little further and ask more questions. Okay, so should I change the process or what is exactly, you know, you need to ask the next question down to really drive further.

[00:29:31] But is it human error or is it, you know, is it a design flaw in my process that is going to create this room for error?

[00:29:38] Karl: Got it. Okay. Got it. So, Diane, this has been great. I really appreciate your experience, your wisdom, your insights. And this was a fun conversation. So thank you so much for joining us.

[00:29:50] We really appreciate it.

[00:29:52] Diane: Well, thank you for inviting me. I've enjoyed myself too. It's great. It's always great to talk to you.

[00:29:57] Karl: Okay. Well, that was a great conversation. Really enjoyed speaking with Diane. So Ben, what was your take?

[00:30:05] Ben: Overall, I think there's just an amazing wealth of experience and insight from her side.

[00:30:09] And I was expecting not to have a lot of parallels between her conversation and the one I had with Jonathan being where he sits on the transportation side of things, but the retail journey and that hands on approach she talked about with understanding what happens in the stores was actually how Jonathan got frankly hooked on supply chain and logistics as a technologist.

[00:30:31] So I wanted to jump quickly into that kind of origin story for him. And before we get into some of his more interesting points. Let's take a listen.

[00:30:40] Karl: Let's do it.

[00:30:43] Jonathan: It is mind boggling to go to a store and see items on shelves and understand that these items started somewhere in Asia or somewhere, like somewhere across the globe.

[00:30:57] And they went on a car, on a truck, on a train, on a boat, on a plane sometimes. It took so much work for you to see that one item on a shelf. I didn't appreciate it at all until my time at Gilt where I realized like, whoa, like it takes a lot of work just to like manage the inventory at the warehouse.

[00:31:21] Like I can only imagine the amount of work to get through the whole supply chain, it goes like, lifecycle. And so that was really, really interesting to get a much deeper, and be part of the action. Eventually, the opportunity presented itself for me to start Transfix, with my co-founder, Drew.

[00:31:42] Karl: Really interesting origin story from Jonathan. You know, it reminds me of where Diane started and kind of her origin story. She talked about how really her first big project was to drive speed, to drive speed to guests, as she talked about it in her retail business.

[00:31:59] Ben: Yeah, and obviously for a transportation provider like Transfix, there's a lot of parallels there in terms of driving speed.

[00:32:07] What I found most interesting in tying technology back to this is that they, at the Transfix side, were looking at speed to bid. Trucks aren't necessarily getting much faster, but the old way of getting bids in a brokerage environment was A, not technology driven and B, slow. Let's hear how he solved that.

[00:32:30] Jonathan: So at first it was, okay, we're not going to publish a rate to the customers. We're going to recommend a rate to you. And then there's this idea that if you negotiate longer, you can get a better rate. I'm sure if I call this next carrier, I'm going to get a better rate. What happens is you're just wasting time.

[00:32:51] You're getting the right rates and your lead time to pick up is getting shorter and shorter, and now your rate is going up. So at some point we took the controls of like the, we are going to submit the rate via data science. But what we did is create what we've called a control panel where our leads and our more senior rep that knew our regions better than anybody, better than our algorithm, had the ability to say, wait, I know there's an event happening in this region, like whether it's a hurricane that's changing route last minute.

[00:33:25] And so then like we added levers. So like, okay, let me increase the rates manually. You had a lot of flexibility on like when you want to do it, what regions you want to do it, at a shipper level, at a facility level. We build up such a strong control panel that they felt still in charge while still having the whole process being fully automated.

[00:33:48] Ben: Jonathan actually challenges one of the preconceptions we have about supply chain technology or technology as a whole in that it is rigid. I think we've heard this in the past, that it takes a long time. I think Diane was talking about this, that to find the results of a test were millions of dollars and years in advance, right?

[00:34:06] So Jonathan points out TMS, Transportation Management Systems, as an area that was ripe for disruption in this space and found ways to get faster with an innovation in that space. So let's take another listen to that.

[00:34:21] Jonathan: Very often people think of technology as a very rigid tool. It is what it is, and it doesn't account for the edge cases.

[00:34:31] And I think where our industry is going is the TMSs that have been there for decades are lacking traction these days because they're so rigid and more and more of the new TMSs is out there, or frankly, the new homegrown TMS that people are building, are built to understand that we can't guarantee anything.

[00:34:54] And it's all about how fast can you response and adapt to a change. And the common one that's happening every day that people often don't think of a major event because it's not happening so often that we know, but a truck driver being late has tons of ramification and the previous iteration of technology is to let it happen.

[00:35:17] And don't reschedule the appointment. Don't do anything. The shipper will eventually find out that it's 2 p.m., the truck's not here yet. And then the shipper will be upset, but eventually the truck will show up and everything will be fine versus now you can have technology that, okay, I'm tracking the truck.

[00:35:32] I know the truck's going to be late. Let's trigger some automated scheduling tools that is going to proactively ping the warehouse and say, hey, we're not going to show up at two. We're going to show up at four. And now the warehouse, it's 11 a.m., has time to like, okay, I have this truck coming two hours late this time, reshuffling the people that work there.

[00:35:50] And now it's less chaotic. And if you use that example that happens day to day and use it on like much macro level, bigger events, I think everything becomes a little bit smoother and faster.

[00:36:02] Ben: So Karl, this might seem a bit subversive as we're on a CIO and technology focused episode, but I picked up on Diane saying, people, process and systems, and very directly saying in that order in terms of priority.

[00:36:16] And so we've heard a bunch about AI on this episode. And one interesting take that Jonathan had on it was that there are places where the person can't be replaced or improved upon. So I think that'd be a great clip for us to end on is to listen to Jonathan talking about where people make a difference, even from the CTO's perspective.

[00:36:39] Jonathan: Rather than talking about like what you should do with AI, I have a strong conviction about like what you should not do with AI. And I think what you shouldn't do is minimize your core relationship because you want to automate a phone call. There are facilities where our team called the facility major so much scheduling that it's starting to have a good relationship.

[00:37:03] They started to talk about their kids. And so, and guess who would always have the best appointments? That guy. That guy who knew the life of the facility managers. And like, if we send that facility manager to talk to a machine, I don't know how many good appointments we would get with facilities, like it gets more complicated.

[00:37:23] They all want to move to emails and all this stuff. But if you have the opportunity to create a relationship, that's what humans are good at. That's what you should optimize your team to do. Now, if you get, I don't know, a lot of, tender, like shipment tender by email, and they're all disorganized,

[00:37:45] that's a good spot to potentially use Gen AI. You could use simple regex formulas to try to figure it out without AI. AI is not like the hammer and every problem is just a nail, there are other types of tools to figure this out, but the very repetitive that produce no relationship value, I think is a good place to start to think about Gen AI.

[00:38:15] We did this project, so we had every year we do like a hackathon where every one of our engineers for a week can do whatever they want. And one of our engineers found a great use for Gen AI and we still use it today. He built it in a way that it ingests all of our shipment data and he creates a summary about what happened in the shipment so that if a customer calls us and asks, hey, what happened in the shipment that happened two weeks ago, if you're a rep and handle 500 shipments per day,

[00:38:53] you have no idea what happened two weeks ago on that ship. You have no idea. So today what happens is, we used to tell them, okay, let me look into it and I'll get back to you. Now it's, I'm clicking a button, ChatGPT is pulling up a summary. I was like, oh yeah, this happened on the shipment. We thought that was a really cool usage.

[00:39:15] Ben: Just a perfect point to end the conversation with Jonathan. I think that blend, when done correctly, of people, process and technology as he's expressing here, is a secret sauce for the best organizations in supply chain.

[00:39:28] Karl: Such a great call out, Ben. You know, at some level, it's really obvious. Like, guess what?

[00:39:33] People are important. But in a world, particularly this phase of evolution and supply chains where technology is so incredibly important, it can be easy to sort of lose sufficient focus on people development and the importance of people. You know, we talk about AI evolution, you know, you hear the word human in the loop.

[00:39:51] It's very clear that human in the loop is incredibly important. And we've heard this from some of our other guests. Like, what does that mean? It means, you know, talent development, a different focus on the population of candidates that as a supply chain leader, you need to bring in to the organization.

[00:40:07] So, agree. It's a great way to end an episode that is focused on technology and is just another reminder that the people part of the equation is absolutely vital.

[00:40:17] Ben: Well said, Karl. But at the same time, AI is still a big freaking deal right now. So maybe we should plan on dedicating some more talk time to that specific area of technology in an upcoming episode.

[00:40:31] Karl: Yeah, that's a great call out. You know, we've spoken pretty much with each one of our guests about AI. So I like that. Let's do an episode where we bundle all that together. I think that's a great way to keep the conversation going.

[00:40:45] Announcer: You've been listening to the Logistics Leadership Podcast presented by Flexe. The opinions of the guests aren't necessarily the views of their company. If you'd like to learn more about the podcast or join the Logistics Leadership community, check out this episode's show notes and visit flexe.com/podcasts. Keep the conversation going. Email us at leadershippodcast@flexe.com. The Logistics Leadership Podcast features original music by Dyaphonic. The show is produced by Robert Haskitt with Jeff Sullivan, Ben Dean, and Karl Siebrecht. Thanks for joining us.