#12 Matching Technologies to Supply Chain Needs

Adar: I’m Adar, your host today and our guest is Dyci Sfregola, founder and CEO of New Gen Architects, a digital supply chain advisory and software implementations. Hi, Dyci.

Dyci: Hello. 

Adar: Great to have you on. So maybe we can start with the trends. You obviously talk a lot with manufacturing or with companies that work in supply chain in general and you see what they struggle with. So what do you see as the trends in the supply chain space?

Dyci: I think right now what I’m seeing is very consistent with I think the headlines. There is a talent shortage from just a number of people from a skill set of people who are already in the space professionals that already are working and there’s a big move to digital. I’ve been in the digital supply chain space and you know, cloud-based technology since before the pandemic. So as we all know, the pandemic really accelerated. And I would say accentuated maybe anything that people were kind of kicking down the road. So we can do that later. Digital transformation, we can do that later. Technology implementations, we can do that later. And all of that has now come front to mind for people. So when you read a lot of the McKinsey research, Harvard Business Review, you see a lot of what I would say headlines in the paper of the thing that executives are saying is really stopping them from doing that digital transformation is talent shortage people, skillset, things like that. And I mean, that’s very consistent with what I’m seeing when I talk to prospects, when I talk to customers. The focus that I’m in, no, my background before I started New Year in Architect, I was working at other consulting firms and working with household brands, Clorox, Coca-Cola, big huge enterprise companies. And I started my company to focus more on the start-up small businesses and even mid-market, some people would call it. And we see a lot of really good intentions and people who absolutely want to do a transition into digital and adopt not even new technologies, but technologies that have been around for a while that they never really were, I would say, forced by the market because you don’t undergo a transformation, in my opinion, unless there is a need and urgency. If you have a need but it’s not really urgent, then you don’t really think about it.

Adar: Just inertia, it’s just really hard.

Dyci: Exactly, exactly. So you have to have a need and there has to be urgency. So now with that need and urgency, people are saying, okay, how do we automate these manual activities? How do we free up time for our people to be able to make better decisions, strategic decisions, the data itself, is it necessarily the, I don’t want to say clean, it’s not the word I’m looking for, but it’s not the key that we can depend on. You know, we can’t just take all of these numbers that we have from the last six months, to the last 18 months and then plan our business that way. We need people to be able to analyze the market and to support the technology. There are so many times where because of, I think, a mix match of understanding on the decision maker, you know, the business user side and the technology is that, you know, artificial intelligence, machine learning, like the system’s going to know it. So then, you know, sit down and I have a business user tell me, well, why didn’t the system like know to do whatever, whatever, like we also didn’t tell it. Like, you know what I mean? You have to have that human element to work with whatever the technology is. So I mean, I would say that what I’m seeing is definitely very consistent with what the headlines are and that people are executives are pushing for the automation of digital, people have digital budgets, they have software budgets, and they’re trying to figure out what to start with first and who to bring along the journey, how to bring those people along, how to upskill people, reskill people, how to fit the talent gap. You’ve got a lot of, especially in the manufacturing space, you’ve got a lot of people that are gonna be retiring soon, they’re gonna take tribal knowledge with them. And I’ve talked to a couple of the different manufacturing partnerships in the space MEPs who are trying to work with some manufacturers to either revamp or implement some sort of apprenticeship program, make it fun and sexy to work in manufacturing. There are quite a few, you know, organizations like manufacturing renaissance and trying to figure out how to solve the talent shortage. So that’s a very long answer to your question. 

Adar: Yeah, I mean, that’s really interesting. What you’re saying is that we need people to be able to implement those changes. Not enough that you have the data, it’s not enough that you have the technology, you have to have the right, I would say, maybe mindset and people to use that data and make decisions out of it. You also mentioned that it’s urgent. Why do you see that it gets urgent and what would you suggest the company usually to, what do you suggest them to start?

Dyci: Oh, my goodness. Okay, so the second question is harder. The first question is easier because now from an urgency perspective, I would say when I first started doing cloud-based technology implementations, it was very much an early adopter situation. And I would say normally you probably see the early adopters adopting for a little bit longer. So it was normal that you would talk to companies and say, oh yeah, we don’t need that, like whatever. Yeah, we can live without it, but now with consumer expectations changing, I wouldn’t even necessarily say new disruptions. Obviously the pandemic was like a big one because there were even companies that didn’t do risk management. You never expect it for everything to happen at the same time. You know what I mean? You didn’t expect for your manufacturer to be shut down and for your freight forward to not be able to send stuff and for people. So you never expected all that to happen at the same time but I personally think that we’re getting into a world where the media is hyping up all of these supply chain disruptions as if supply chain disruptions didn’t always happen. I mean the weather was always the thing. Obviously yes, with climate change you know things are getting a little bit worse but I mean I know people who have been working in the Florida region you know hurricane season down in the Caribbean they’ve always prepared for hurricane season. They’ve always done that. So yeah it’s not new but what changes now with the urgency is that the consumer expectations change because technology is not new technology has a, we’ve gotten to the point to where we can do so much with our phones. And we have so much at our fingertips, we have so much information, it’s so quick. And you want things to be accurate, that I expect that as a consumer and also even as an employee, I expect that as a consumer for a company to just give me that information. I want to know when things are in stock. I was actually just checking for a hotel room with my Marriott app yesterday. And when I went in, I put in the dates, that’s the first thing you do, and then it pulls up the hotels that are available and the rooms that are available, click the room and then it gets me to the screen where I have to pay for the reservation and it tells me, oh, well, this is the room isn’t available. So I want to get on the phone with the guy, whoever at Marriott and I’m like, dude fix your system. I fix this because the more that happens, I’m just gonna go to another brand, you know, if I’m not so loyal, I’m just going to ride or die with this brand. I’m gonna go somewhere else. 

Adar: Because somewhere else does provide the experience. 

Dyci: Exactly, exactly so, it comes down to not only the consumer experience, but of course the voice of the customer and the supply chain space always, the customers’ King, the supply chain is Queen. I did not take that. I did not coin that. I got that from Cherry Highness. So I will give credit, because that’s what creditors do. But even just from the employee perspective. I mean, having technology again, going back to the point of, in my daily life I have my iPhone, I have my computer. I can do all of these things. I don’t want to get to work and feel like I got in a time machine. And now I’m writing on sticky notes and writing on the whiteboard and sending an email and then printing a PDF. They’re so many different things that we, and I say we as millennials, and Gen Z, we digital natives grew up with this technology and it’s become so embedded in our lives that having technology and being a digital first company is also an employee retention tool. And we all know that you know how much it costs for employee turnover. You know how much it costs to train someone. You know how much it costs when someone leaves with that tribal knowledge. So it’s not only about the customer you know outside of the four walls of the company but the urgency for digital is also internally, of making sure that you’re providing an experience where people want to work at your company. Between quiet quitting, the great resignation, all of that you have to also be a good place to work. So there’s urgency from so many different sides and we’re not at a point anymore, to where being digital is a competitive advantage. You’re at the point where the market is changing, the world is changing. If you want to stay in business, you have to revisit your digital strategy. Because if you don’t, you’ll be disrupted and you know, someone else is gonna take over. 

Adar: Yeah, it’s like there’s no room for you to be here if you’re not doing that transformation, right? It’s already, if you look at the innovation cycle, it’s after the early adopters. You have to adapt. When you look at the company, what are the considerations? here should they start?

Dyci: Oh yeah, that was your second question. Where to start? 

Adar: Big questions, I know.

Dyci: It really depends. So the reason why I say it’s harder is because you get a typical consultant answer of, it depends, but it really does. So one of the things that I make sure that we do as a team is to understand what the overarching goals and objectives of the company are. Because we’re at a point where I mean, in the supply chain there are hundreds of tools, and supply chain is also so large. So if you think about like the score model which has recently changed but make source, deliver, innovate, it evolved into a couple of different models, return, deliver, etc. But all of those different functions have their own technologies and you’ve got your ERP, your WMS, your TMS, procurement tools, CPFR tools, like the list goes on and on and then you now have the point solution and data integrators and APIs and you know all of the technology that can now be connected in data warehouses and data lakes. So that’s just the supply chain. Then you have your FinTech tools and your Martech tools and you know your advertising. So it really comes down to an entire transformation. If you say I want to be a digital first company, I want to remain relevant. And when you sit down and you talk to a CEO or CFO who says that they want to do this, I think they have great intentions. Not always realizing how much work it really is going to take and how many years and how much time iterations it will take to actually get there. If you know, depending of course on when you are in a digital maturity, there are different phases of digital maturity. Some companies are a little bit further along than others. But when you sit down and you realize, oh crap, this is a lot of stuff. And we have to figure out where to start, for me, I always start with, what are you trying to do? Are you trying to gain market share, increase revenue, become profitable? And you would think that like, yeah, obviously, I want to increase revenue. Obviously, I want to be profitable. But that’s not the overarching goal for everyone. That is almost always a result of the overarching goal. But sometimes the goal is I want to improve employee experience. By improving employee experience, I expect for a result of that to be increased profitability because that will cut cost and turnover.

Adar: Yes. You have to get a little bit more specific into what you want to achieve. And then you’ll be able to get into it, understand what your problem is. And then find a relevant solution.

Dyci: It’s when you pull out the six sigma toolbox of the five Ys, the check sheet, what’s actually happening, because also if you, how do I say this? I don’t know if that’s necessarily what you’re gut is saying, but not necessarily who is complaining the loudest. Because sometimes you walk into a company and this one department or this one VP is complaining the loudest and making the most ruckus. So that’s what you start with, but if you actually sit down and do a business case and analysis, it’s like, well, you’ve got some people that are quietly suffering over here. And if you fix this because of all of the fires that they’re unnecessarily fighting all the time that they’re unnecessarily spending, you know, with this manual workaround, you would probably actually, if your goal is profitability, get your profitability faster, get to those profitability goals faster because you want to decrease your cost and improve. the ways of working on that side. So it definitely comes down to understanding the goals, doing a business impact analysis. And then even sometimes you can’t always start with what you want to start with. And there can be a couple of different factors for that. So then what we end up doing is a matrix, impact versus level of effort. So if there’s something that’s low level of effort and it will have high impact, even if that impact is just company morale or like getting buy-in for the rest of the transformation, even if it’s not going to immediately give you that financial metric that you’re looking for, that quantitative, if it’s just the qualitative result of having everyone excited for what’s gonna come next, then start with a quick win, you know, get everybody on board.

Adar: Getting the quick win also creates the momentum you need. It’s just like a completing task. Like starting with something really hard is sometimes you cannot do the first initial steps. And I had a question for you. Does an opportunity to innovate have to be felt by someone? Like, are there cases where nobody’s feeling that something’s wrong and no one is talking about this problem but there is a huge opportunity to make something much better, much more profitable and create more revenue. Do you see that?

Dyci: Do I see that people don’t know that an iPhone is better than a flip phone because they’ve never used an iPhone before? That’s what comes to mind,I remember when the iPhone came out and there was a camera on it and I was like, I don’t need a phone with a camera. I have a digital camera and I have a phone. Why would I need both of those? So, there’s absolutely a world. You know, you talk to people all the time where they don’t see the need until there is pain and that pain can lead to the urgency. So, it goes back to you have to have a need and an urgency for someone to actually, you know, move it forward, the initiative for, and it has to be the right person because, I mean, you, the people who are using the tools and doing the manual work and realizing that this is ridiculous. Like, why can I order my groceries to be delivered to me in 15 minutes, but I have to print off a PDF and scan it and send it via email to a supplier or like manually take all the information from the PDF like OCR.. it’s many moons ago. So it has to be the right person that also recognizes this isn’t the best way of working. And I think it’s just a matter of, how do I explain this? There’s a book that I can’t remember what it’s called, and it’s about innovation. And the author is a guy who works with tons of government organizations. NASA has worked with the lead innovators that you can think of as a company. And the way that their leadership always understood the need and the urgency to continue to innovate even though to your point no one really feels, They would have the annual meetings where. the team would say, okay, if we keep doing what we’re doing for the next five years without changing, what potentially in the market is gonna call us to lose everything that we’ve accomplished so far? Is it some other technology that’s going to disrupt us? Is it another company who has a different business model? So they were always hyper aware of the fact that even though we don’t feel anything now, it doesn’t mean it does not exist. And they would look to these trend setters, market research, everything that was going on outside of the laws of the company. And even outside of just like the main big competitors, and that’s how they were always able to innovate. So to your point, you don’t always feel a need, but if you’re in business, a need is always there. To understand, to innovate, to change in my mind, just because of the nature of who we are as a human population, things happen. The world changes, you know what I mean? Companies that are still around are around because they’ve changed.

Adar: I think it’s also another of like, but being proactive rather than reactive. I mean, you don’t want to be the last one to make that change because then you lose a lot of the advantages. So you would want to be forward thinking. You would want to understand, to anticipate the needs, the challenges to be the first to do something or the second, but to be the one in the front.

Dyci: Because to your point, by the time you’ve gotten on the bandwagon, you’ve missed out if you’re being reactive. And it’s the typical spectrum of early adopters versus laggards and then all the people in the middle

Adar: Yeah, exactly. We also talked before in conversation about innovating versus optimizing when we’re doing this transformation. What do you see as the difference between the two?

Dyci:I look at innovation as something completely new. Maybe not completely new because there’s a, I think that there is very little in our world in general that is completely new. I mean, the human population has been around for many, many years. We always get some sort of creativity or something from somewhere. So, you know, I loosely say something completely new versus taking what you have and just maybe doing an incremental change. So, I think that a lot of people want to be innovative because it sounds nice. But I think that where at least, you know, start up in mid-market, where I see a lot more is just optimization. Process reengineering. And I think it’s also a matter of. It’s not just the technology. You could say, or someone could argue potentially, hey, I have this process, but we’re just going to completely scratch it and start over. We’re going to have a new innovative process. And it’s cool. You have this one process. But in order to innovate, truly, it has to be like a complete cultural change. You have to have more than this, like, individual function area or business flow or workflow. In order to be truly innovative, you have to touch so many other pieces of the business. Again, it’s a cultural change that takes a lot more time and energy. So I think that optimizing certain pieces of the business is an incremental way to get to innovation If that makes any sense. So, you know, going from call it a hypothetical level of maturity zero to a level of maturity for you’re not going to go from zero to four. You’re going to go from zero to one one to two, two to three so you’re optimizing certain processes along the way, but you’re on an innovation journey. You’re trying to get to this completely new innovative way of working, way of being, you know culture within the company and you get there through these incremental re-engineering of processes optimization of processes implementing point solutions versus entire platforms And it’s a school of thought, some people say rip up the whole thing, do it all at once. I’m not for bull in the ocean. Take it a little piece at a time, get your quick wins. Don’t get into change fatigue or these never ending projects that go on forever and ever. But a case can be made for both.

Adar: Yeah, I really like your approach. You think of it as like optimization is part of the innovation process is maybe the first steps should be like optimizations and then you get eventually to be innovated because you’ll be you’ve been first able to optimize your existing processes before you’re starting or doing something completely new, but then you’re already set for that big change that big innovation that everyone’s talking about.

Dyci: Exactly. The optimization is maybe laying the foundation for the innovation.

Adar: Nice. Great way to finish our interview. Dyci Sfregola, thank you so much for being with us today.

Dyci: Yes, thank you for having me.