Transcript
Hi. This is Carlos Centurion, president of River Logic.
Glad to be with you with you today.
This is the first of our Real Talks, which is a series of broadcasts that are designed to engage with industry experts on topics related to supply chain, business transformation, and innovation.
Today, we’re excited to have our first host, Ali Aksut. Ali is solution strategy director, digital manufacturing, and supply chain at Microsoft.
He and I have actually worked together, for several years. I have a lot of respect for his point of view and knowledge so Ali, welcome.
And, if you could please start by telling us a little bit about your background and your role at Microsoft. Thank you. Carlos.
It’s a pleasure to be here with you guys.
My name is once again Ali Acut. I lead the Worldwide solution strategy in digital manufacturing and supply chain for Microsoft.
I’ve been with Microsoft a little over ten years, but my entire career has been over twenty five years in the supply chain domain, basic. I’ve been a supply chain practitioner, and I operated in this space, all the way, you know, back at the early days of my career, as a consultant initially working mainly in the supply chain planning space, supply chain optimization space, and then later on an an entrepreneur as well as, you know, a practice lead for various consulting engagements. And, you know, I’ve been with Microsoft last ten years. Again, driving our strategy and growth for in the context of broader supply chain and manufacturing digital manufacturing capabilities. So you have been engaged in supply chain, in a variety of different ways, you’ve seen it end to end, under different situations.
Tell us what are the top strategies that your customers are using today?
As they transform their supply chain. I I think what’s been happening is there has been a little bit of a shift And it’s I I wouldn’t say, like, exactly maybe a shift, but it’s an evolution. Right? So when the, the COVID nineteen hit or even in the the earlier days of that, the the pandemic, there was a lot of focus around, visibility, especially in transit visibility.
And this was related to, you know, the transportation network related issues, the port congestion, you know, the lack of chassis or drivers or not having the containers in the right place. Right? And then since then, you know, there that as the the port congestion and the transportation related issues started to go away, the price is coming back to the pre con you know, pre pre COVID days. Then our customers started to look into now their visibility into supplier networks, and even like multi, you know, tier, visibility into what is happening, where the risks are arising, whether it’s, again, risks associated to long term risk, or whether risk associated to short term, you know, meaning, like, you know, my PO is being, for example, delayed, they’re because they’re having some issues.
My supplier is having some production issues. And then as soon as people start to get to that visibility, and understand what is really happening in their network, then they start to looking into, alright, what is the downstream impact mean in the context of, like, you know, understanding the the the the, whether it’s in the long term, like, the risk associated to profitability, risk associated to revenue, risk associated to, you know, inventory risk, in my network. For example, or to even looking at the short term risks. Right?
And everybody’s trying to understand what is that downstream impact? And then from there, quickly move into what can I do? What whether again, I’m doing any kind of a planning in the, you know, that that, that long term horizons strategic horizon, to the degree of if, you know, there is certain risks emerging and potential risk related to political risk or other, like, you know, other risk in my network that I need to look for multi sourcing, near shoring kind of, you know, options where will that make sense to, you know, what kind of policy that I should employ? Where should I set up my nearshooting foot capacity?
You know, and and how much of that capacity I should say she said, to even down to that detail level of production planning and scheduling. I have a delay in my order. So quickly, people are starting to evolve from that getting visibility understanding the downstream impact related to that visibility in the context of any supply risk. And then from there, looking, for various different options of what is the best course of action to optimize my network.
Again, whether it’s on the again, strategic layer or tactical or, operational layer? It certainly is something we’ve seen too, which is, the the endless series of disruptions are continuing to pile on each other, and you’re right, sustainability is the next wave to add more complexity we’ve seen also now that, where he’s the feeling recessionary pressures, that there is an interplay also with in cost optimization and margin optimization. And so people are starting to ask a question from the finance side, fine if I take that cost out, but what does that mean in terms of our profitability now and in the future.
So that’s excellent.
So Ali, how are Microsoft customers driving top line growth or maintaining their financial performance while without sacrificing, the operational excellence and without negatively impact in their risk profile?
I think the starting point, related to that is still the visibility at the forefront. Right? And there has been a little bit of a shift in terms of what that visibility meant.
Since the, you know, early days of the pandemic, I would say, compared to what’s been happening over the last I would say six, eight months right now. Initially, it was all about, you know, visibility related to intrinsic visibility. Right? Because if everybody knows, the port congestion or the, you know, the the lack of chassis and drivers or containers just being in the wrong place.
It was very much about, like, where can I get visibility into? When am I gonna be able to discharge, you know, my goods and various different or load my in various different ports of test, you know, origin or ports of destination kind of a thing. What we are seeing recently now, you know, now that network that the transportation network started to de to stabilize and the cost of the, you know, the the transportation started to go back to the pre COVID, nineteen days. Now a lot of organizations are looking to have visibility into their suppliers and then even their supplier supplier.
And then as soon as they start getting that visibility, that’s where they’re starting to ask the questions around how can I now update and optimize my various different plans, whether it’s in that context of I’m actually investigating various different risk that are related to my, you know, suppliers because I see that are certain bottlenecks or certain, you know, risk whether it’s in the, you know, weather related risk or whether it’s because single sourcing related risk or certain, you know, political related risk that might emerge there that translates immediately into strategic and tactical, you know, plans and and optimizations?
Right? How can I actually even go all the way up to the strategic level of you know, create and redesign, reconfigure my entire network and determine, you know, whether I should be actually employing some near shoring you know, kind of policies? And if so, what should be that capacity?
That kind of a tactic strategic level even, planning. And going down into, again, tactical and even operational, right, when I discover certain, you know, disruption, whether it’s in the context of my SNOP, IBP kind of a process where I need to determine where am I gonna be, you know, placing my inventory, how much of that and even down to the level of, you know, when I just, just, you know, identify a certain disruption that is in my operational horizon, how do I adjust my production plans? Like, in the event of this PO is gonna get delayed What is that gonna do to my production schedule?
And then what is my now, given that PO delay, what is my optimum production schedule? So A lot of the organizations are starting to move from that, you know, now I got the visibility, transit visibility. Now I got actually even my supplier visibility. Now, how do I use that information to start planning whether it’s at the strategic level or it’s the tactical or operational level?
Yeah. And we’ve certainly seen that that loop of, dynamic visibility plan, replan, game ability again is so critical, and as you say, being able to tie into the strategic so that the over time the strategic can adapt to become more resilient, and also more performant.
One of the things that we’ve seen that’s really important in those decisions to go fast is the understanding of, okay, if I’m if I’m going to make some changes, which customer, which product do I need to prioritize?
Based on strategic value based on the profitability of those customers and orders, and, just having that north and the visibility the, into those financial performance drivers are so important to be able to move fast.
And so it’s certainly aligned with that so the next question, Ali, is, do you have examples of real world supply chain, transformations you know, that how how are people making all this into a reality?
I mean, the a lot of the customers of ours, again, are not looking at it just from a technology kind of, aspect perspective. Right? Even though, like, Microsoft, we are a technology provider technology is only one facet of, basically, that that whole equation around, running your supply chain effect fleet, it involves the a certain organizational adjustments and organizational change, as well as related to that the, business processes adjustments in line with that. There is a, you know, a a lot of stuff that is happening in the context supply chain as well as the technology with the research the recent emergence of ML and artificial intelligence technologies becoming more and more prominent and integral part of these decisions, well, to be able to leverage these state of the art, edge technologies that are emerging, you need to have new sets of business processes and a different way of looking at the these business process and and organizational structures.
Right? So a lot of our customers that are going through this kind of a digital transformation are looking at it holistically from, you know, people processes as well as technology perspective. Because if you just do one of these aspects, without looking at those trifecta of those factors, I think, you know, any initiative that you do in the context of, digital product transformation will yield suboptimal results. Yeah.
Hundred percent alignment on that. We’ve certainly seen that, in our projects, if it’s, say, just supply chain or a piece supply chain, you get maybe x value, but at the moment you start involved in procurement and manufacturing finance, even the commercial organization, the value can be ten x. And is is more lasting as well. So definitely a line on that.
Last question for you, Ali. We really appreciate getting your perspectives today.
Is, what advice do you have as people try to get going on this transformation journey? What’s the best way to get started? I I I think the the advice and and this is not basic advice. A lot of what we are hearing from our customers, right, are the following.
When it comes to this kind of a digital transformation, a lot of our customers are no longer just looking at it. Like I said, just as technology. And certainly, they’re not looking at, like, let’s just, like, rip and replace a whole slew of these systems, and let’s embark on a project that’s gonna take us two years, four years, whatever it is, to accomplish this, and then I’m gonna turn a switch and something is gonna happen. Right?
A lot of organizations right now, are more interested to deliver. Incremental gradual value as they, you know, move in their digital transformation journeys. Right?
What I would recommend, there are certain pitfalls that I see with related. This is, by the way, is the right approach definitely right, that incremental gradual delivery, using the composable architectures and microservices and being able to quickly innovate and deliver value. That’s certainly, is the right approach. I’m not against that. But what I’m seeing a lot of time, in the, in the market is a lot of the time, the some of the projects are initiated just from a pure perspective of data. Let’s just get the data from these various different systems, and then we’ll figure out what to do.
It could be, you know, a good starting point if there was a north star. Right? And that’s, I think, the first recommendation, I, or I will I will make. Right?
For any kind of a digital transformation project, I will recommend every single one of our customers out there. First of all, define what that North Star that you wanna achieve. Right? What is, you know, based on the current state, where do you wanna go in your future state?
What business outcomes? What specific you know, improvements, in terms of business value that you’re gonna be achieving by the end of this journey. And then craft your roadmap. Basically, those individual sprints and iteration, what you’re gonna be achieving in step one, once step two, step three.
What are you gonna tackle first? Are you gonna tackle, you know, for example, the long term planning strategic planning first? Or are you gonna focus on, you know, immediately like the production planning, production scheduling issues, or you’re gonna fix something related to your material handling processes in terms of your warehouses, logistics, and so on. This is the the the I think my biggest recommendation is before embarking on the journey have a very clear and concise idea about what that end state looks like, have an organizational alignment in terms of not only what that end state looks like, but also what does the individual steps to get you to that north star gonna look like and have that alignment in a horizontal manner because supply chain is not just something that is run by you know, just the supply chain organization.
It involves multiple department, stakeholders, and personas.
So everybody needs to be on the same page. Otherwise, what I’m seeing, before, even if you might have the Northstar, I’ve seen in, before some customers where they actually take, like, based on the changing dynamic priorities, they might take a detour and then, you know, realize, like, what did we just do? Why did we spend the last six months on this. That’s how they get us to that north star, the way we envision.
That’s the my, you know, the most you know, in in my opinion, the the recommended, my recommendation is most important recommendation is. Yeah. Certainly. Being purpose driven, with a clear plan, good alignment.
We’ve seen on top of that, also that, if people can get a quick win, say, within four, five, six whether you something is working, capturing value, then people can rally around that and it’s a great springboard to maintain the momentum of, a transformation initiative because it’s it can be very uncertain at the beginning, how people engage in what the outcome could be.
So Ali, thank you so much. This has been great talking with you and getting your insights.
And for the audience, thank you so much for your participation.
And we look forward to seeing you at the next real talks event.
Thank you, Carlos, for having me.
