Hello, everyone, and welcome to this episode of the show. I'm your host Tyler Karen. Thank you so much for joining us here today. On this episode, we're taking a look ahead to twenty twenty three and twenty twenty four in supply chain. So we're gonna be looking at some of the big factor, some of the things that are impacting the market, the industry, and some of the other things that we should be keeping an eye on as we move forward, maybe even some advice for businesses looking to navigate some of these waters here in the coming years. And so joining me here today is Carlos Centurion. He's the president of river logic. Carlos welcome. Thank you, Tyler. Well, I'm thrilled to have you here on the show today, Carlos. And, obviously, there's so much talk these days about supply chain. Right? In the last couple of years, really went from a topic that not too many people discussed, you know, but now it really has exploded into the mainstream. Tell us a little bit about that evolution and what has kind of brought this into the primary conversation? Yeah. Sure. So traditionally, supply chain has been an enabler of a business. Right? So it's responsible for making sure people get the product out. And the main focus has been, okay, once we get the product to the customers, let's do it in the lowest possible cost. Mhmm. And so you have all these initiatives that try to cost lowest. So, for example, just in time inventory, you probably about that, right, single sourcing, which means buy everything from one supplier because you can push the cost down. And so on and on and on, make everything in Asia, for example, is another one. And as things started to change, so first, we had some changes kind of underlying driven by the Internet and social media and things like that. So changing customer preferences, new channels, e commerce channels. So that was kind of starting to drive change. But all of a sudden, when COVID hit, and it happened to combine with a lot of geopolitical turmoil, like taxes being levied on China, and the bottling up on the sewage canal and things like that. And all of a sudden, you see the supply chain. It's just breaking down. So now you have gigantic buy backlogs. You have costs going up and down all over the place. And it became it went from being an enabler to being in a boardroom topic. Yeah. Yeah. That that's that's absolutely right. It feels to a certain extent like a perfect storm of events all combined at the same time to create, you know, what was, a little bit of a chaotic world for people for a little bit. Very much. So, now we're starting to transition again out of the significant back orders. Mhmm. But the cost structures are still very different than they were before. And it's unlikely they're gonna go back to where it was. That you're going to continue to see changes whether it's driven by inflation, tariffs, freight rates that are going up or down, the cost of components, and so even if there is less constraints, there's still going to be a lot of financial type constraints that are impacting the results what a supply chain does or doesn't do. And so it's still going to remain broadly a sea level boardroom topic for the for the foreseeable future. You mentioned inflation, you know, and inflation has been obviously a hot topic of conversation in a post COVID landscape. But what impact does inflation have on supply chain operations? What do people need to know about inflation and how it impacts supply chain? So the most, basic, normal one would, you would say, okay, the price of oil might be going up or the freight rate, maybe a little bit of cost of labor is going up. And these costs are going up not in a uniform way. So some go up more than others. More fundamentally, though the cost of capital is going up. For firms. So their borrowing costs, their equity costs. So that means that they need to also increase the efficiency of the resources and they need to get better at locating capital, whether it's working capital or long term capital. And so I think that's where you know, people initially think about, okay, my freight rates are up. Yeah. What do I do about that? But, really, Most of the calls that affect the business, whether you're just holding inventory or doing something else, they're all going up. They're just going up in in different ways. So that is not a straight linear function. And that's where the complexity lies with inflation. Resiliency is a term that you hear quite a bit, right? And people talk about the resiliency of the supply chain. How have you seen maybe the way that the supply chain operates, maybe change a little bit since post COVID, you know, to bring in a little bit more resiliency into the supply chain. Yeah. There's definitely been, a massive amount of investment in what people call visibility. Mhmm. So visibility is just tools that say, hey, where are my supplies? Are they in the port? Are they in a ship? Are they still with a supplier and coming coming out of their plants? Right. Or your deliveries. So just, you know, tracking tools, monitoring tools, those roll up into control tower offerings, where people are saying, okay, if I have this situation now, I can use machine learning say Mhmm. To extrapolate, okay, where where am I gonna have a problem in the near future? So that's kind of the the baseline set of investments. I think more innovative companies have gone beyond that, and I started to look at the structure of their value chain. By structure, I mean, okay, is your policy to manufacture everything in Asia? Or, for example, bring some of that in a near shore or on short type situation. Right. And if you're gonna do that, which products do you do that, or do you do it on some components that are critical to you? Is your policy to have dual sourcing meaning that you have at least two suppliers for any product or component that's strategic or critical to you. And, is your policy, for example, to run your plans at eighty percent utilization instead of ninety five or ninety eight percent. So you have spare capacity. So being able to look at the structure of the value chain and not just the visibility and kind of do more and do faster with current resources, but change the resource structure change it makes so that you can have more resiliency as you go forward because you can't predict all the trends and you can't predict all the things that are going to happen. It seems as though people to a certain extent were caught off guard by what happened in twenty twenty. And just like we said, the the confluence of events that all kind of came together at the exact same time. And it seems as though, since then, people have placed an emphasis on tools and solutions that can be flexible that can prevent maybe being caught off guard again. Have you noticed that that the the people are preferring solutions that can flex and move depending on what the next challenge may or may not be? For sure. Yes. I think the in the old days, the they were a silo solution to solve silo progress. Right. Because everything will be caught up in Los Angeles, and your goal was to make it as efficient as possible. The problem with that is exactly what you said. There's no resiliency in that. At the moment something changes, everything falls apart. That's right. There you have giant backlogs, cost coming out of whack. You don't understand the profitability of your customers or products. So solutions that are more flexible in nature, mean that they allow you to, for example, run what is scenarios. Mhmm. So what if I did this? What if I did that before I go on and implement something? And then what if can be about any part of the business, what if I push out my circular economy offerings, meaning I do more refurbish more recycling, more repairing, and if something bad happens, then I can use those refurbished products to satisfy some of my demand and really just use my new approach to satisfy maybe some of the other demand that I have. And so there are different ways that you can have the flexibility to to deal with the resiliency. But at the end of the day, it's all about being able to test different things that you might do even when things happen. Carlos, that's that's really well put. And I think you explained that really, really well. So let's now take a look ahead. Right? So what trends? What things are you looking ahead to for twenty twenty three and twenty twenty four? Are the things that you in particular are keeping an eye on? Yes. For sure. There's a couple. One is that as you see with the inflation that we have Mhmm. COVID might be receding a little bit and the impacts it has had on the supply chain, but for sure geopolitics is not. Right? There might be another pandemic. Nobody knows what's gonna happen, but with the inflation, the emphasis on cost is starting to come back again. Mhmm. And not just cost, but also probably profitability. And so I'm definitely keeping an eye on how firms can leverage these more flexible technologies that we were just talking about. To understand what markets, what products, what combination of resources and relationship with suppliers, make the most sense to them as things slow down a little bit. And the other trend is, of course, the sustainability trend, which, as you know, climate change, carbon emissions are becoming more and more top of mind, probably a little bit ahead in Europe, vis a vis here in the States. Yeah. But if you're looking at a firm and you're looking at, okay, I I've got my pandemic constraints, my geopolitical constraints, I have my cost, now changing in different ways. I need to look after my profitability. Mhmm. You layer in carbon emissions and climate change on top of that, and it's just another series of complexities. Yeah. That's somebody's gonna have to manage whether it's because you impose, a cap on emissions or because you get taxed on that, or because you want to look good and get ahead of the problem and do different things. At the end of the day, those two trends are going to be more complexity on what's already a pretty complex picture for the supply chain. Now, different industries, and different markets are impacted in in different ways sometimes, just depending on again, the complexities of that particular market. And so are there solutions that can work across different industries, across different markets depending on what the needs are for each each industry? Definitely. Definitely. I think the the the elements of the solution that need to work really well is that the solution needs to have the ability to represent the customer situation. And within that, picture of the customer's situation, be able to recommend things the customer may or may not do that would improve their ability to meet their objective So to make that really tangible, for example, we call that a digital planning twin. The digital planning twin is if I took a picture of your business, your entire value chain all the way from your suppliers through maybe manufacturing logistics, inventories, but then on the other side, your customers, your products, customers you serve, the channels you use to serve those customers, and be able to translate all that into, okay, that picture in the future is going to generate this cost, this profit, this much customer satisfaction in terms of my meeting, my SLAs, and maybe in the future, it's going to generate this many carbon emission, And so what can we do to justify or or satisfy all the objectives somebody might have across all of that. Right? Because you have growth objectives. You're going to have profit objectives. You're going to have customer service objectives. In the future, you may have resiliency objectives, which are now still at the forefront, and you may have some carve on emission objectives. All of those are imposing constraints on each other. And the more you dial up one, the more constraints it imposes on the other one. So being able to identify all the traitors across that is going to be really critical. And it's about finding that right balance then at that point. Right? You know, balancing, like, how much can I ramp up this knowing that it constrains this thing over here? Right? Exactly. Yeah. That's right. So what advice do you have for businesses that are looking ahead? Trying to plan you know, plan for the future and look ahead to these sorts of things and these challenges and these trends that you've laid out. What what sorts of things can they start to do now to begin to prepare for the future? I think having the capability to understand, as you said, what is the right balance across all these objectives? Mhmm. I like to call it the efficient frontier. So there is a series of points in a in a curve somewhere that says, you know, if you pr if you prioritize profit, versus, say, resiliency, then you need to be here. Yeah. But if resiliency is more important, then maybe you need to be here and a little bit less profit, and really understand that. But beyond that, you need to you need to think about a cross functional team that has the mandate, or the charter to go look at this you know, entire value chain type issues. Because what we see in companies today is, is they're all caught up in silos. They have an FP and A team. They have maybe an SNOP team. They have a long range planning team. But who is responsible to really look across the end to end and tie the real operational decisions with the financial decisions, with the customer centric decisions, product decisions, that need to happen. I think companies will do themselves a very strong favor. If they had a team that had the mandate to own or at least drive the analysis around those decisions. Carlos, help me wrap up this episode, in a nice boat. What do you want people to understand and to know and to walk away with once they've, once they've watched this episode and entered our conversation here today, what do you hope is the is the main idea of people take away? I think that, we all understand that there has been a lot of complexity and more complexity is coming our way. I think that complexity, people want companies that deal with faster than before. I just want them to think that there is there are ways to deal with this. That don't rely on the old trying to, you know, cut out my company in a thousand silos approach. Yeah. Where there are cross functional technologies that can look at the strategic, the tactical, and the operational and be able to recommend the path across that helps you deal with the complexity and still meet the majority of the objectives. Carlos Centurion, he is the president at River Logic. Carlos, thank you so much for being here today. Thank you. My pleasure. Absolutely. Everyone, thank you for tuning in to this episode of the program. We appreciate it very much. Of course, for more. Stay tuned for more content from RiverLogic. We will be back very soon. With more episodes and more conversations just like this. But for this one, for Carlos Centurion, I'm Tyler Kearn. We'll talk to you next time.
