The Global Supply Chain Crisis has been one of the biggest challenges in modern history that have had a detrimental impact on companies. How many companies, businesses and professions have been placed into financial distress because they could not effectively address the Supply Chain Crisis?
What is the solution? There is a recovery from the crisis, but it needs to happen more quickly for some companies. Technology can play an essential role in this recovery; I recently read an article on the McKinsey website which provides some key insights into one aspect of digitised business functions.
Consumer demand and capital expenditure concerns
McKinsey: What are some key things that customers are asking for lately?
Deborah Surrette: If I think about the broad universe of clients that we speak to, the number-one thing that they’re all looking for is education, education, and more education. A huge part of the job that our go-to-market teams and industry experts have is to educate clients on how they can solve their problems. If we looked at a pie chart of our hours spent, at least 60% is on education about opportunities and alternatives.
If you think about what clients are looking for from a buying perspective—meaning what will make them decide to put automation into a warehouse and begin that journey—they’re looking to extend their labour: “We’ve got X amount of people available, how do we make them as efficient as possible?” Or they’re looking to make an immediate impact from an ROI perspective: “How can we automate certain functions, tasks, or capabilities to get a payback in less than a year or less than a year and a half?”
McKinsey: Given the initial capital expenditure required for brand-new warehouses and all the setup involved, how do customers think about the benefits of robotic solutions using a current footprint versus using a new warehouse?
Deborah Surrette: We have done our fair share of greenfield warehouses for some of the largest companies across the world—where they’ve actually gone out, purchased a site, and they’re building the warehouse from the bottom up. GreyOrange can help implement the automation to get that warehouse up and running.
But we also see clients that have existing warehouse footprints that are not well utilized—meaning they’ve sunk a ton of investment into systems that are taking up lots of floor space but don’t serve the client’s current purposes. We have a team of presales engineers that does material-handling estimates and figures out how to fit different types of automation into a space. It could be anything from a co-bot [collaborative robot] or sortation machine that provides some productivity improvements all the way up to a high-storage, high-velocity, tote-to-person or goods-to-person automation solution. It could also involve intralogistics to help with pallet movement. We can take an existing floor plan and help utilize it in a more efficient way.
Right now, we work on about 50% greenfield and 50% existing footprints. Some of the more interesting use cases involve turning what used to be stores into micro fulfilment centres. Those spaces were never built for high-velocity fulfilment, but we’ve found ways to help those clients repurpose them as high-velocity fulfilment centres.
Image By: AWS
Losing sleep
McKinsey: What’s keeping you up at night, right now, as a chief commercial officer?
Deborah Surrette: I have the good fortune to be the chief commercial officer for a company that serves some of the largest retailers in the world. When I think about the things that my clients are thinking about, it’s how to go faster and how to do it easier.
I always want our teams to think about everything from the client’s perspective. Clients often weigh the risk of moving forward versus the cost of staying where they are, and their decisions get cloudy because by staying where they are they haven’t broken anything—but they also haven’t fixed anything. So I always encourage our teams to ask themselves, “What is the client thinking about that’s going to either hold them in place or help push them forward? And then how do you make it easy for them to move forward?”
Education is one thing that can make it easier for clients to move forward. Seeing how other customers have done it can help. Automation tends to require a lot of capital, so to help clients access automation faster we’ve also put together robot-as-a-service models that commit the client for only a year instead of committing them to a capital outlay that covers ten years. Sometimes, we might encourage a client to bite small and chew fast: take a project that’s smaller, get through it quickly, and then take it from there. You don’t necessarily have to boil the entire ocean to get good value out of starting an automation journey.
McKinsey: Can you give me an example of a project that’s bite-size?
Deborah Surrette: Think about a nonautomated warehouse that’s running with conveyors and personnel. Those workers have never seen an autonomous robot and never worked next to one. So some of our smart clients will first put in some co-bots to move product to those folks—as an intermediate step—before engaging in full goods-to-person or racks-to-person automation. That can help employees get used to what it’s like to work next to automation, let them see the benefits, and then later the client can move into another area of automation that might be higher productivity but also be a little more expensive and a little more disruptive.
Key lessons
McKinsey: What have been the most surprising lessons along your path in this industry?
Deborah Surrette: I’m surprised on a continual basis. I love to come to everything with a beginner mindset. I will tell you that the past couple of years have absolutely surprised me—in the sense that people are learning how critical the supply chain and logistics industry is to the health and welfare of economies around the world.
Many times, in the past, I’ve seen supply chain and logistics become a backroom function—meaning it’s not one of those preeminent functions, like e-commerce or digital transformation, that gets the board’s attention. But now, I’m finding that many of the decisions our clients are making are at the board level, because the board realizes how critical automation and robotics are to their company over the long term.
Magic wand
McKinsey: If you had a magic wand, what would you change or create to make the logistics industry better?
Deborah Surrette: I feel like sometimes the automation experts have so much knowledge that never makes it to the decision makers. We need to figure out how to bridge that information gap—whether it’s creating more self-service tools, creating more forums for education with respect to supply chain, or enabling folks to see what transformation actually looks like when it’s complete.
Image By: Centre for Ageing Better via Unsplash
Value nexus
AI will have a massive influence on the future world of work. There are fears that AI will create mass unemployment and replace human jobs.
“Ever since the start of the Fourth Industrial Revolution, there have been fears of mass unemployment as machines replace humans. Instead, the demand for human-based goods and services has risen in line with the increased capabilities of machines. There is a great danger from AI if we allow it to become self-designing.” This quote was from Steven Hawking’s last television interview in 2018. It shows the value nexus of technology and human-based roles within corporations.
I am an outspoken proponent of technology, which can add significant value to companies. The C Suite should not shun technological investment over fears that automating processes will impact job creation. On the contrary, it will increase the demand for human skills in areas of your business that will improve value creation.
The Mystery Practitioner is an industry commentator focusing on the shifting dynamics and innovative thinking that BRPs and turnaround professionals must embrace to achieve business success.
