Reimagining Intelligent Supply Chains with Automation

Dushan: Hello everyone and welcome back to another exciting episode of Zinnov podcast Hyper Intelligent Automation series, the most revered destination to listen to the who’s who of the global automation industry. I’m Dushan Garg, Engagement Manager at Zinnov and I will be your host for today. We have with us John Delligatti, the Director of Digital Supply Chain Transformation at SDI, our digital supply chain company.

John is a Qlik Luminary in the Qlik Luminary 50 Class of 2021, and one of the winners of the 2021 MDM Future Leaders award which recognizes rising stars in the distribution industry under the age of 40. Today we’ll be delving deeper into his role at SDI and how he’s worked in the automation over the years. It’s great to have you here with us, John.

John: Appreciate the introduction there and really nice to be here. We’ve talked before this, I love talking about this stuff, so very excited to share whatever I can for the community.

Dushan: Thank you, John. Let’s get started. So John, you’ve had a very interesting career progression over the last 13 years across sales, procurement, and supply chain. Can you briefly walk us through your journey so far and how you became a leader in the digital transformation space?

John: Sure. Well, you’re very generous with the 13 years there. Some of it was working through college, but I got a lot of experience. I’ll tell you what, managing sales for a pool store on Long Island in the summer in New York is a pressure cooker environment.

So, while you could say it was a college job, it really did prepare me for the business world, in some ways better than school. So that was sort of my work through college job, but it was full-time and I ended up with a business degree. And I sort of fell into a supply chain job. I tried to do some investing type things and it turned out to be, ‘Hey, do you want to sell all your family life insurance?’

And I realized pretty quickly it was not for me. I had a business degree which is relatively generic. It wasn’t specialized. And I landed in an optical distributor named OptiSource which is a subsidiary of Essilor. They are a huge optical lens manufacturing company. They own Luxottica now, things like that.

So it’s very big company. I started out on the ground floor of their supply chain. So it was basically, ‘Here’s an Excel document containing all of our forecasting and lead times, make sure we don’t run out of stuff.’ So if anyone’s ever been in one of those positions, you realize like, okay, you’re not just a buyer, you’re a planner and you work in compliance, and you work in international shipping.

So it’s a great position to be in. So just digest all of this information that’s flying at you and learn… Hey, maybe I can do this better right now. I mentioned earlier, run everything off of an Excel document. I mean, if that’s not a way to get somebody to think about automation, I don’t know what is.

But what was cool about it…You know, you mentioned the journey. I got to explore that on my own. And it’s one of the reasons I’m really passionate about this automation, analytics, and digital transformation journey that I’ve been on… is it’s really a journey that you can go on just through self-learning, through questioning why things are built the way they are, and why aren’t they built better, and doing some research yourself and come up with those ideas that really changed things.

That’s sort of been how I blazed the trail in my career when I went from the optical industry to my current job. It was the same, but just at a much larger scale. We’re talking about going from $10 to $15 million company to managing hundreds of millions, if not billions of dollars of spend in SDI.

So now all of these little wins that you have to save yourself some time significantly exponentially multiply and now you’re saving companies millions of dollars through initiatives and saving X percent on sourcing initiatives without ever actually needing to go-to-market and things like that.

So it’s about making iterative improvements realizing you could do things better. And then as an example, I was this Excel wizard who knew everything about our procurement data. And then we started on our big data journey and we’d bought in companies like Snowflake and Qlik to help speed us up in the business intelligence area.

I ended up getting up to speed on that, running with that department. Then all of a sudden we want to look at automation. I am someone who was a self-starter, curious, ask questions, why, ‘Hey, let’s see what this person can do with automation.’ And now, luckily for me, with some hard work and some luck, both automation initiatives, such as RPA and analytics at SDI report up to me through the operational side.

Dushan: Oh, that’s a really interesting journey, John. Thanks for sharing it with us. I’m going to now switch to the most pressing question of our times. So when COVID struck, the supply chain industry was impacted significantly and it was entirely due to the complete lockdown and restriction on the movements. So can you tell us about the major disruptions that happened in SCM over the last two years and some all of the major trends that emerged in the supply chain management area?

John: Absolutely. So, you hit on a couple of excellent points, namely the lockdowns. When you think about supply chain management, getting things from point A to point B can happen if people and ships are moving from point A to point B. And factories don’t have people in there. So right off the bat, any information you have on lead times is flimsy at best. You need to seriously re-evaluate your delivery requirements and whether your partners can meet them. It’s one of the reasons that having an analytical setup, such as our ZEUS analytics platform was really helpful was because while people were realizing, ‘Oh boy, my lead times are going up.’, we have indicators showing us that lead times are going up as it was happening, as well as, since we sift through our data on a regular basis, we knew if supplier A doesn’t have it, we know who supplier B and C and D are already without needing to do any research or go out and find quotes. We have some of that information already. So it’s sort of one of those situations where yeah, a lot of innovation was there and a lot of trails were blazed through this, but also if you were prepared, you were way ahead of the game in terms of identifying secondary sources and things like that.

Running a technology podcast, I’m sure you see this all over the place. Innovations that were on the roadmap for a year or five years or 10 years happened in months, right? Some of these things that we’re doing, I mentioned lead times being one of the major problems we went from not really being integrated with UPS, to developing all sorts of process flows and bots that relied on, where does UPS say the shipment is? Okay, if UPS has a shipment that was delivered, how do I let my end-user know that? And what kind of rules and systems can I build around that to help the system run in a more automated fashion, so that not only while the supply chain is backed up, but while we’re all working from home, how do we create that sense of community and knowledge proliferation without being together? So I think those were the major factors.

Dushan: Thank you for sharing that. And likely, I think you described it well, automation was actually the greatest accelerator in our times and what we’ve seen with many of our customers also. And in SCM improvement also automation played a key role. If I can take it further, what are the use cases on top of what you’ve said in supply chain management where you actually help the customers generate significant value in the overall automation space and if you can also elaborate on some of the examples of these outcomes, such as revenue increase, cost reduction, or a stakeholder improvement in the experience.

John: Sure. I believe when we originally met or at least I met your counterpart, Jeff we were talking about the real-world impact of some of our work that affected the New York City Department of Education. So that’s the largest school system in the world, public school system. And before everyone knew what PPE was, SDI was providing that to the Department of Education as part of a maintenance and janitorial contract. So once the demand for that stuff went up, we were the supplier.

So some of those automations that you refer to in some of the ROI, whether it be in terms of dollars or human capital was really felt there. So as an example, some of those tracking bots were very helpful, because when you go from ordering 40 cases of masks to $40 million of masks, or somewhere in that ballpark, you need a lot of legwork to confirm.

When we talk about schools, there’s thousands of schools. So if you have all those orders going to thousands of different schools, how do you know when it was delivered to here, and here, and here, and here, and did this custodian receive it, and did this custodian receive it? So when the amount of orders explodes like that and you can’t explode the staff, that’s where automation comes in.

I have previously mentioned some of those links up with UPS, FedEx and other carriers. We could say with a proof of delivery, your masks are at this school, go and get them at the doorstep. Another similar path there, but different is applying that logic to industry.

So we knew HVAC for some major retail players… You include Walmart and we helped them with their HVAC and operational things around the store. So fixing all the equipment, like freezers and things like that, that run the stores and helping them provide process improvements and the ability for a technician to look in an application and say, ‘Okay, I need to fix this motor. Let me order it.’ That’s how it was, say, in the past. And then you take a guess and say, ‘Hey, is my motor there?’ And you check a week later whether it’s there or not. Now, creating that Amazon-type experience for a business user, they can look and say, ‘Hey, this part that I need to complete this work order isn’t here yet. So I’m not going to drive to that store.’ Meaning, I saved two hours of wrench time. Because in the past someone would just drive there, they go in the back, ‘Where’s my package?’ It’s not here. Out of luck! You just wasted that time. So while I don’t have exact figures for you on dollars, we kind of keep that a little tight to the vest, but what I can tell you is that we have a significant increase in what we call first call completion times, which means if something’s broken and you need to go fix it, you do it the first time. The reasons that would fail are you’re waiting for a part. You ordered one part, but you don’t have the second part that you also needed. Things like that are contributing factors.

And then when you flip it back to the New York City Department of Education example, just by the fact that they were able to provide crisis care for community members, provide meals and things like that, while the city itself had very stringent restrictions on masking and social distancing, it really speaks to those real world impacts of what the automation is doing.

One other nice juicy business KPI I can give you is the orders processed by head count, meaning, ‘Hey, we have this many people working in the back office and we’re able to process this many orders successfully for our clients.’ And that is up significantly. And that’s the metric for our entire business.

Everything together. It’s a mindset. So when you look at it as a whole, we can process more value with the same amount of heads. That speaks volumes to it right there.

Dushan: I totally agree with you. And it was great to hear about these kind of value proposition, especially the New York City Department of Education case study. It was really impactful.

John: I mean, if you’re listening to this Hyper Intelligent Automation podcast, you probably know that automation is good at saving money. I think we’re a little bit past that. And I think leaders are now more focused on, ‘Well look, we’re not automating to cut jobs. We are automating to make people more efficient. We are automating to make people’s work more impactful.’

So I think it’s a good example to share because you can see that it’s not just about the dollars and cents adding up, but it’s about really helping people and how the world is changing, frankly.

Dushan: Now as you have mentioned that within SDI you’ve also spearheaded the ZEUS MRO technology and you mentioned it a little bit before. Can you please tell us about that?

John: Sure. It’s what we call our ZEUS technology wheel. It’s branded form of analytics, e-procurement software, mobile applications and business intelligence. So while I may have my fingers in those pots to different degrees, my major focus is the automation and the analytics.

We have some fantastic partners throughout the company including the IT folks and some of our DevOps people who work on the e-catalog to provide a robust catalog that’s tailored to MRO, as well as a mobile app that’s tailored to MRO. And what I mean by MRO for those who aren’t supply chain folks – Maintenance, Repair, and Operations.

So the indirect spend that’s usually a rounding error for big companies…If you’re Pepsi, you probably care more about the sugar that goes into your soda than the belts that go in your factory. It’s just how effective the business. But when you pull all that together under one resource that has a vested interest in saving broad client base money, there’s some real power there. So when I say, especially built for MRO, and I mentioned in our previous chat they’re trying to provide that Amazon-like experience, you and I are probably used to that, ‘Where’s my order?’ It’ll be here in two days. This item is always the same item. But in MRO, you’re dealing with things, where this is a belt. It’s 30 inches and it has these grooves on it, but is it made by Gates or a Goodyear or XYZ manufacturer? Am I going to get it within a two day window, where it might be nice to get your coffee in two days from Amazon? If I don’t get this belt in two days from whatever the vendor is, I’m going to have an outage at a factory that costs a million dollars an hour.

There’s the same type of desire, but they’re for very different reasons. And while people listening may say, ‘Oh, but I get that today.’ That is not common in the industrial MRO space. Not just because the technology keeps up, but because if you guarantee someone something’s coming in two days, it means something much different than Amazon guaranteeing your coffee will be there in two days, right? There’s much bigger implications there. So that’s an important note there that the ZEUS technology wheel, while anybody can do what we’re doing… There’s technology out there. If you dedicate the resources and hire the expertise, you can do it. We are the only shop around that is expressly built to tackle the need of indirect spend, MRO, and facilities maintenance spend, where other people see that as a nice-to-have, a way to grow the business, that is SDI’s business and that’s what ZEUS is built for.

Dushan: All I can say is, Wow! The technology sounds very effective and I think it’s kind of a very niche proposition which SDI brings to the table.

John: It’s one of those things where some people think having a niche limits yourself, but when you find your niche and you’re the best at it… the way this company has been growing in size year-over-year at rates that, frankly, we couldn’t do without these automation-type platforms and process redesign initiative. So it’s a really cool time to work here and be a part of the automation revolution.

Dushan: Thank you for sharing that kind of a perspective. It was really insightful. Moving on, to get a ground-level perspective from you… So many of our supply chain management focus clients, they may be advanced in their automation journey and they feel that they’ve reached a saturation point in terms of transformation and automation focus area. So in your opinion, what can be the further disruption in automation within the SCM over the next couple of years, especially in the functions where there is limited or no automation done currently?

John: It’s a sprawling question. There’s a lot of different ways you can go with it. We’re not at the saturation point. The ideas that came to me, I understand that, like I said, ‘Oh, if I was in this position, this totally makes sense. You know, frankly, I suspected you were doing this manually, but I didn’t know what your actual task was, so I could nominate it. Now we know.’

So we’re still in that phase where we’re in idea gathering mode. We’ve done it for about two years. We’ve tried to reach down to the boots on the ground level, but it’s really been driven from VPs and Directors, because at SDI we have so many unique clients. Those will never stop. Maybe there will be less of them, but they will never stop. We’ll get a new client at that, something different and there’s something new to automate.

That said, process mining at least for a company like us who has yet to automate it is where I see this going. I know, process mining is relatively new. I’d be surprised if your SCM people have had it rolled out for 10 years and they figured everything out. To me, I think that’s a next logical step. Now you could argue that that step is currently being undertaken or maybe we’ll be undertaking the next one to two years, so it’s more short-term. Because for us, I think we’re on the cutting edge and the cutting edge is starting to deploy AI to help identify processes, whether that’s process mining and task mining, or something else. From there, you could argue again it’s something that’s been on the radar for a while, but now the technology is there really snowballing and steam rolling into the proliferation of things like IoT and blockchain tracking.

So these have been things we talked about for awhile, but I can tell you some of our biggest clients that we work with want to do it and they don’t have all the assets tagged with IoT devices. Well, now we need to catch up. We understand that you want to predict failure. We understand that you want to do preventative maintenance and we understand that certain really high performing organizations are doing that.

But we are an MRO. If you just think about MRO as 10 years behind, it won’t be perfect, but it’ll paint the general enough picture. So in the coming years as back office functions are becoming automated from that perspective, from process mining, identifying them, writing code to automate them. We can really start to spot trends using IoT as an example if we know that based on a certain reading, a factory line is reading a temperature that’s too high. And based on that temperature being too high, you’re going to need to replace that belt in three months.

Dushan: Thank you, John, for these extremely valuable insights and especially around the amalgamation of various automation technologies. It was great coming from a seasoned expert such as yourself. And I think SDI’s plans for the future sound extremely promising and we look forward to seeing how they unfold.

I’m certain our listeners found this episode equally valuable and rich with insights. Thank you. And thanks a lot everyone for tuning into this episode of Zinnov podcasts, Hyper Intelligent Automation series. We will be back with another episode and another leader soon. Till then stay safe and take care.