November 21, 2024 • 25 mins
In this episode of Shelf Life, we’re joined by Alexis Lozada, Associate Principal for Supply Chain Planning at Westernacher Consulting. With over two decades of experience at companies like Del Monte Foods and SAP, Alexis shares his unique insights into the evolving landscape of supply chain planning. Together, we explore how consumer goods brands are adapting to trends, leveraging technology, and navigating new challenges in demand planning for 2024. Alexis delves into the skills planners need, the importance of scenario planning, and the strategic shifts reshaping the industry.
Key Topics Covered
- The Planner of the Future: Why modern planners need a blend of communication, quantitative skills, and a network-based perspective.
- Scenario Planning: The pivotal role of scenario analysis in understanding supply chain drivers and managing variability.
- CPG Industry Trends: How changing consumer preferences, private labels, and e-commerce are challenging traditional brands.
- AI in Supply Chain: Separating hype from reality and understanding the practical applications of AI to enhance supply chain processes.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
From Alloy AI.
This is Shelf Life.
Speaker 2 (00:18):
Why is it that in 2024, planning is more
complicated than ever?
Speaker 1 (00:21):
What role do private labels play in the CPG space?
How?
Speaker 2 (00:25):
do consumer brands separate hype from reality when
it comes to AI?
Speaker 1 (00:28):
On every episode of Shelf Life.
We answer questions like theseand more, with the help of
leaders across the consumergoods industry.
Speaker 2 (00:35):
Today, we welcome Alexis Lozada, Associate
Principal for Supply ChainPlanning at Western Ocker
Consulting.
Previous to joining WesternOcker, Alexis spent decades in
supply chain planning andtechnology at companies like Del
Monte Foods and SAP, where hewas senior product owner for
integrated business planning forsupply chain.
I'm your host, Joel Beal, CEOof.
Speaker 1 (00:55):
Alloy AI and I'm your co-host, Logan Ensign, Chief
Customer Officer at Alloy AI.
Speaker 3 (01:15):
We'll be back with Alexis right after this at Alloy
AI.
We'll be back with Alexis rightafter this.
Supply chain partners and evenyour own ERP, then easily
surface insights to drive salesgrowth.
Every day, brands use Alloy AIto see POS trends, measure
promotion performance and makebetter replenishment decisions
with their retail partners.
That's why we're trusted by BIC, crayola, valvoline, melissa,
(01:42):
doug Bosch and many more.
Speaker 1 (01:42):
Get a demo at alloyai today, all right.
Well, alexis, really great tohave you here, excited for the
topic today, and I think you'vegot a really unique background
to help color and give uscommentary on all things
planning.
So, to get us started, we'djust love to hear from you a
little bit more about yourbackground and how you've got
where you've gotten.
Speaker 4 (02:02):
Well, first of all, thank you both, joel Logan, for
the opportunity to come togetherhere and be able to talk about
our experiences.
So, in terms of my background,I've been in the supply chain
space for about almost, I willsay, 20 years in various roles,
but I was mainly focused onsupply chain strategy, mainly
(02:23):
focused on supply chain strategybasically look at every single
opportunity to drive continuousimprovements of the amount of
supply chain, internally andexternally as well.
But then I moved into the worldof innovation where I worked
with SAP on their newcloud-based supply chain
planning solution, mainlyfocused on inventory planning,
(02:44):
but all along, that's a spacewhere actually the consumer
packaged goods industry.
It's pivotal to them.
I'm passionate about supplychain but, surprisingly for many
, I actually have a backgroundin finance.
That was the start of my career.
I'm an economist by training,so I did spend quite a lot of
investments in that space.
So bring it together.
Speaker 2 (03:05):
The world of finance and operations has been actually
a very rewarding experience forme professionally Excited to
have you on, alexis, I did notknow you are also a recovering
economist.
Speaker 4 (03:17):
I am a recovering economist.
I wanted to work for a centralbank right out of college.
Yeah, I could tell you moreabout that, but that didn't
happen.
Speaker 2 (03:27):
So how do you go from economics thinking you're going
to work at a central bank tosupply chain at Del Monte Foods?
Speaker 4 (03:36):
Well, to make a long story short, I basically
migrated.
I spent my entire career incorporate finance.
I ended up going to graduateschool in Venezuela, got a
master's degree in finance and Iworked for my last job.
That was in investment banking.
But then I moved to the UnitedStates and I decided to reinvent
(03:58):
my career.
I went back to graduate school.
That's when I went to CardiganMellon and then I turned into
supply chain by accident.
I actually was a contractedconsultant by Del Monte to do a
back of the envelope networkoptimization for factory direct
shipment for their, I think,vegetable production lines and
(04:19):
so forth.
But at any rate, that's how Igot into supply chain, because
after my contract with you, Italked to the VP of supply chain
at the time he offered me thejob.
It was a phone call where Isaid, well, we have this problem
.
And I say, hey, look, that's anetwork optimization based on
transportation costs.
That's me the economistthinking, with a lot of the data
(04:40):
science classes that I took atCarnegie Mellon, and I said, hey
, guys, I think I can help youwith that.
Speaker 2 (04:47):
Let's start talking a little bit about planning.
So you're at Del Monte.
It sounds like you did a lot ofdifferent things in supply
chain.
I'm curious what are the bigtrends you see right now?
Speaker 4 (04:54):
So I think the trends that I'm seeing is the planner
of the future will require morequantitative and communicational
skill sets, more centralizedplanning processes, right
Leveraged by technology, and Ithink technology is also, in a
way, it's going to support that,but it's creating a trend set
(05:16):
towards that Planning for supplychain to be specifically, which
I think is what we're talkingabout.
The best supply chains of thefuture are going to be network
aware.
They're going to be end-to-endnetwork aware.
More than ever, planners haveto look at networks within
supply chains and be able todrive benefits out of it.
(05:37):
So think about that for amoment.
When we talk about networks,we're talking about the
connection of distribution offinished goods to customers,
manufacturing processes orassembly processes connected to
those distribution networks, rawmaterial sourcing connected to
those manufacturing processingnetworks, and then the vendor
(05:58):
sourcing right, which is anothernetwork by itself.
All of that is the networkright, and, of course, one
individual won't be able tomanage that overall that's
impossible, right, but it's ateam.
But it's a team that requiresthen have a network view.
That will be the ideal.
What do I say is the ideal?
Because that's the type ofarrangement in terms of the kind
(06:20):
of skill sets for the planners,the type of processes defined,
the type of teams that are builttogether in order to really
take full advantage of thetechnologies that exist today.
They're not being developed,they're here and they're just
being improved upon, but they'realready here.
I just don't think thatprocesses teams are not there
(06:44):
yet.
Speaker 2 (06:44):
Processes teams are not there yet.
So just to recap, you're sayingthis network-based approach and
the technology is there.
It's just more a function ofthe people and the processes to
take advantage of all thetechnology that's been developed
, because, as you said, thesearen't new concepts.
I mean, these have been talkedabout for a while.
Speaker 4 (07:03):
No, and so the trend now is to how to facilitate that
process right.
Ai could play a role there, Ithink, change management and
leadership vision, because to me, is the vision right?
If the supply chain leadershipshares those values and that
vision, it's capable of driving.
You know, people changes,process changes, right it's
(07:24):
capable of driving people.
Speaker 1 (07:25):
Changes process, changes right.
So, alexis is sort of theobstacles you see in this
transformation or optimal sortof planning process more around
organizational behavior than iswhat you see.
Speaker 4 (07:38):
So if you think about change the spark of change
comes from leadership has tohave that view that a supply
chain, in order to really drivevalue and remove inefficiencies,
lower costs, increasedproductivity, that needs to be
viewed from the entirety of thechain.
You cannot just take one valuehere and call it a win when
(08:02):
you're actually passing thatupstream.
A procurement guy cannot say,well, I just saved the company a
million dollars when I'm justbuilding inventory like a madman
.
So that's the traditional case.
So it has to come from thatleadership.
The second aspect of this isthe leadership doesn't
necessarily have to come fromthe executive line or the
(08:23):
executive management of thecompany.
It also says about the cultureof that company A company that
fosters innovation, that fosterscommunication, that fosters
people's ability to communicateopen, even a manager or even a
(08:44):
supervisor, in a culturalenvironment that ideas are heard
of, are consumed, are processed, are taken into account and are
actually put in place.
That's the type of also ofchange that is required right?
Speaker 1 (08:58):
Let's assume you've got organizations that want to
improve, that want to embracechange, but you have competing
priorities From your vantage.
Why invest in improving yourplanning process?
Speaker 4 (09:10):
There are companies that have really good planning
processes, very solid.
What I think is lacking is theability to run scenarios that
can help you understand therange of your potential
opportunities, your upsides andyour downsides.
The ability to understand whatare the elements that really
(09:30):
drive my supply chain, whichones are the drivers that are
really sensitive to my supplychain in terms of their
performance, in terms of impactand service levels, inventory
levels, on-time deliveries andso forth.
Even manufacturing capabilitieson time deliveries and so forth
even manufacturing capabilitiesbut the escenario capabilities
is one that is key to planning.
To answer your question, logan,that to me has been a huge
(09:56):
discovery with a lot ofcustomers in the latest years is
to say, oh, wow, I can run alead time scenario, I can run a
inventory holding cost ratescenario, I can run scenarios on
changes in variability ofdemand.
Oh my God, lot sizes scenariosI can do so.
That is not in the mindset.
It's not as flexible.
Planning is not as flexible aspeople may think.
(10:19):
The technologies are there,like I said, but it's that the
scenario is.
Is that can help you make thatdecision the right decision, not
just to say, well, it'sdeterministic, right and I'm all
a month to month, I'm makingdeterministic decisions.
It's not deterministic and ifyou want to prepare your your
supply chain into the future,it's really more probabilistic,
(10:42):
right.
Speaker 2 (10:43):
And so Are you saying it makes a lot of sense about,
yes, anything forecasting wise,it's probabilistic, right, and
showing those ranges.
I mean I guess you have toforecast to some plan, but it's
good to understand confidencelevels in those plans.
But let's talk a little bitabout the scenario planning that
you're mentioning.
What is keeping companies fromdoing that more?
Speaker 4 (11:05):
Maybe let's go a little deeper on the skill set
requirements that I referred toearlier.
The first one is communicationBe able to effectively
communicate with an audience,because a planner has to
persuade an influence, she or hehas to defend their decision.
That requires communication,that requires even negotiation
(11:28):
skills, influencing people.
So that's number one.
Number two you refer to, joelquantitative.
You don't have to be a datascientist, right?
But you have to have some basicmathematical skills.
If you have some basicbackground in statistics, that
can help you there.
(11:48):
Including the mathematics isalso the ability to understand
business models.
Business financial valuation Ialso think it's very important.
That's how I got in.
To build business casesrequires doing calculations of
potential reduction of inventoryor maybe margin.
It's a little bit of anadvanced topic, but having some
(12:11):
financial analysis backgroundwill be very, very helpful.
The third one is technology,and I'm going to touch the
scenario part of it, right.
If you think about communication, quantitative skills, which in
a way is also analytical skills,if you have those two, then you
start thinking about the whatif?
What if this doesn't work?
What if this doesn't work?
What if this doesn't work?
(12:31):
That is the moment whentechnology can help you to run
in scenarios, but a scenario isas relevant as the person who
conceives it in terms ofunderstanding that this is a
scenario that is valid.
It's not a scenario for runningin scenarios.
I work with junior people thatcome with 20 scenarios and then,
(12:52):
okay, which one is the mostrelevant one, right?
Well, a planner who knows hisor her supply chain, knows how
it works, knows the variablesthat works there, is going to
ask the right questions.
Speaker 1 (13:06):
I'm reminded of a conversation I had with a supply
chain at a publicly tradedcompany.
This was early in time here atAlloy.
A lot of our perspective is youshould be bringing the true
demand signal into planningprocesses.
I was talking to this gentlemanand we think about it very much
from like, hey, let's generatea forecast, that's the best
(13:26):
number, right?
He paused me in the middle ofour conversation.
He said Logan, you're notgetting it.
Planning is a negotiation asmuch as it is a math exercise,
and so as you talked, it kind ofreminded me of this that you're
kind of looking for someone whoisn't purely quantitative,
analytical, because there issort of coalition building and
negotiation and conversationhappening as well.
Speaker 2 (13:48):
So we obviously work and focus on consumer products.
What are you seeing in terms ofchanges in that space?
Speaker 4 (13:55):
The biggest challenge right now is that for some
companies, especially thetraditional CPGs, they struggle
with brands that their value, inmy mind, have kind of gone down
over time because consumerpreferences have changed, the
sales channels have changed Fortraditionally branded consumer
(14:17):
goods, brands that we know, yourparents knew, especially here
in the US.
Your parents knew, yourgrandparents knew, If you think
about it, if you think about it,some brands for your
grandparents that was, that wasthe, those were the iPhones of
the time, right, and so thatbrand image of a green bean Del
(14:41):
Monte can for Thanksgiving, Imean that is that is like buying
the latest iPhone, mindset,right.
So that brand had a value andit has had a value over 100
years, right, but 100 years havegone by and so now our
generation, even the youngergeneration than us, they don't
(15:02):
see it that way because it's notinnovation, it's just vegetable
deliver in a can.
The fact that people are buyingonline more than going to a
supermarket, the fact that nowthere are grocery stores that
are not mainly selling namebrands anymore, you see that the
(15:24):
growth of Trader Joe's, Aldi's,many other outlets that are not
your traditional grocery storeanymore, that has had an impact
in deprecating the value ofthose brands.
I'm not saying that thosebrands don't have value anymore,
but they're struggling, right,they're struggling.
So now that premium price thatused to be there, it's being
(15:48):
challenged and that's why yousee the growth of private label,
right and so private label.
At the time when I worked forPafante, it was like the biggest
enemy, but the biggest enemy,eventually you join the biggest
enemy, because that's anothertrend.
You see that more and more ofthose CPG companies are also in
the business of private label.
I mean, they sell some localbrand of I don't know green
(16:12):
beans that was probablymanufactured by the Monte right
or the competition, maybeketchup, you know, there's a
private level, maybe it'smanufactured by Kraft.
So that, to me, brings anotherchallenge which is and that's a
challenge of today and thefuture for these companies.
Another challenge which is, andthat's a challenge of today and
the future for these companies,is it's no longer about the
benefits that you draw from yourbrands, but it's the efficiency
(16:34):
in which you manage yourbusiness.
You manage your supply chain.
So supply chains have to bebetter managed.
Their priorities have to focuson how do I improve the
efficiencies while protecting myservice levels, Because now
more than ever.
You have to build customerloyalty by a good supply chain
execution which is filling yourorders in full and on time,
(16:58):
right, it's such a competitivespace and it's fascinating.
Speaker 2 (17:03):
As you were talking and you mentioned can of green
beans Del Monte green beansbeing like the iPhone at the
time, I've never thought of itthis way.
I mean, most of my grandparentsgrew up in farms.
I mean they probably went andbought their beans from the
farmer next door, if they didn'tmake them themselves, and it
probably was this marvel oftechnology that I can go and buy
(17:26):
beans in a can.
Speaker 4 (17:27):
And not only that, but then also in countries like
the US where you have wintersright, you bought your green
beans during season harvestseason.
The can allowed you to eat itall year long, right and so that
is innovation.
Speaker 2 (17:41):
It's innovative.
You can really charge a premium.
You build a brand around thatand then, decades later, it's
like beans in a can Anybody cando beans in a can.
Anybody can do beans in a canright and then it switches to if
you innovate, you can, you know, maybe you can ride that brand
name for a while, but eventuallyit becomes stale, comes stale,
(18:04):
and so either you have to havenew product innovation, which
obviously all these consumerbrands are competing on, or you
innovate with just moreefficiency, better supply chains
, and saying we are just goingto be a more operationally
efficient business and we cansell at a lower cost to
competitors.
Speaker 4 (18:16):
There was an underlying topic in the CPG
world that we can talk about.
It's about traceability andvisibility to the end consumer.
For a while there was thattrend that you know I want to
see where the beans come fromand how they were treated and
how they go through the wholechannel.
There is some of that happening, still happening more on the
(18:37):
topic of sustainability Notreally that relevant in the
world of planning, to be honest,except that maybe you need to
plan for different sources ofyour raw materials.
Speaker 1 (18:47):
But other than that I mean that's another trend that
I know CPG suffered through-right, yeah, it's fascinating
this notion that supply chain isbecoming more front and center
as a sales pitch and adifferentiator, right, I'm
reminded of a conversation justa few weeks ago with someone in
supply chain who had said it'swild, logan.
(19:07):
I am now part of line reviewsand this last line review I was
in the first 20 minutes and sowe've seen in that wholesale to
kind of supplier relationshipjust a lot more emphasis on
supply chain and that beingreally, yeah, that key
differentiator in some of thesegments we work with.
Speaker 2 (19:26):
Hey, Logan, do elaborate there.
What is that about?
Is that about the service levelside?
Is it around visibility in thesupply chain, Because that's a
selling point for your productIf it's sourced from farmers in
Peru, for example?
You?
Speaker 1 (19:40):
know.
I think there's something tothat.
In this instance, it was moreabout skew consolidation, I
think, a little more related tothe white label conversation and
suppliers not needing or sorry,wholesalers not needing to work
with a whole'm going to pickthe person to work with who has
a well-run supply chain, highfill rates, because that's going
(20:09):
to be meaningful for me, and so, as I look to consolidate, it's
important for me to work withthe partner.
Speaker 4 (20:15):
So that's a fascinating topic too, because
it's about supplier-manufactureror supplier-distributor
relationships.
Good relationships areestablished not because we met
at a golf club, but because yoursupply chain executes really,
really well, and for me tothrive, I need somebody like you
executing at that level.
(20:37):
I have seen some customerswhere they're planning.
Believe it or not, theirplanning was really, really
centered around vendorperformance.
So who will source faster andmore reliably?
And that will be my vendorright?
Because what happened to themis that they were holding so
much inventory in their supplychain because every single
(21:00):
vendor they had took foreverunreliable, incomplete order
fields and so forth.
More than ever here in theUnited States, with the CPG
industry, that's exactly what aWalmart, what a Target, what a
Kroger.
You know, the largest retailers, but even the bit size or even
smaller, are demanding of themanufacturers is to say be
(21:20):
efficient, be on time, becausethen I'll buy more from you.
I will give you preference overthe competition Because
remember, at the end retailershave to make a space decision
right.
Every store is a retail spacegrind.
So I want to put you here.
I'm going to sell more of youbecause I know I can get that
(21:43):
from you right, I can alwayskeep it filled during
Thanksgiving, during promotions,during holidays.
What have you?
Speaker 2 (21:51):
I'm wondering as I think about brands and the
evolution in retail.
I don't think this is anythingsuper new, but if you're the
larger brands, it's all aboutdriving efficiency, because for
the most part, they's all aboutdriving efficiency, because for
the most part, they're notamazing at product innovation.
And then you've got all thesesmall, newer brands that I think
differentiate in part,sometimes based on how they're
(22:13):
sourcing right.
They're building a brand aroundhey, we're this new organic
product, or we have asustainable supply chain, or
this is a healthier option.
That's really where a lot ofthe innovation is, and obviously
then the big companies try tobuy them up.
We see this happen all the timewith our own customers.
They're constantly gettingpurchased by the big
conglomerates.
(22:34):
They bring them in and theyprobably run.
You know they're figuring outtheir supply chains, let's put
it that way.
That's another trend too.
Speaker 4 (22:41):
That innovation is not coming from inside the
companies, it's being boughtright.
There are other industries thattraditionally do that to grow.
That's happening in CPG,because that's where it's.
When you have industries witheasy entry, yeah, you'll see a
lot of that phenomenon there.
We only have a couple ofminutes left.
Speaker 2 (23:00):
We'd like to ask this , everybody's favorite topic.
Let's talk about AI.
Is it hype?
Is it real?
You obviously work with a lotof companies at Western Ocker.
What are you seeing For?
Speaker 4 (23:12):
me, it starts with the use case.
Right, it starts with theapplication auth.
I cannot say that there is aparticular use case that is
relevant.
Right, there is a lot of talk.
I see a lot of opportunities interms of potentially
identifying use cases, so Ithink we are in the face of
identifying what those use casesare.
(23:32):
I also think that we need to bevery careful to claim that AI
is going to solve all yourproblems in supply chain.
Believe me, If we go back towhat we talked about earlier now
, technology and again AI willstay within the bounds of
technology.
Again, supply chain starts withprocess, people and the
technology that makes you managethe supply chain better.
Speaker 1 (23:53):
Alexis, what I'm hearing it's a little like
Hitchhiker's Guide to the Galaxythat we have the answer of 42,
and now we got to go figure outthe question in supply chain.
Speaker 4 (24:03):
Yeah, and the thing is, if you want to adopt AI,
it's like adopting a newtechnology.
How is this going to help me?
How am I going to work withthis every day?
The human interaction aspect isimportant and so far, the human
interaction that I've seen issearch, what we've been doing
for the last 10 years, since theGoogle search application came
(24:25):
around.
We're just texting and find,okay, let me find this, Let me
find this.
But you could give a planner achat box and say ask for things.
But okay, and then what right?
Technology is as useful as youknow what matters to you.
So when you come to thatinteraction, what's the value?
(24:47):
Right, and where do I start?
I cannot come every day with ablank slate and say so.
It has to be purpose-driven.
It has to be designed with apurpose for the planner, for the
supply chain analyst.
Speaker 1 (24:59):
Well, very insightful there, Alexis.
We're actually at time, soappreciate all the insight.
Covered some really interestingtopics.
No, thank you.
Speaker 4 (25:06):
Appreciate this.
I love this.
Any other topic you want totalk in the future, I'll be
happy to come back.
I know I've done a lot of thetalking today, but I don't ask
questions, as you probably askmore questions.
Speaker 2 (25:21):
We are here to ask questions of you.
People get to hear plenty fromus, that's great, we'll do a
reverse.
Speaker 4 (25:27):
Maybe I'll look smarter if I ask the questions.
Oh, you figured out our trickthere, alexa.
Speaker 1 (25:34):
Yeah, you've been listening to Alexis Lozada,
associate Principal for SupplyChain Planning at Western Ocker
Consulting.
That's all for this week.
See you next time on Shelf Life.
From Alloy AI.
This is Shelf Life.
Speaker 2 (00:18):
Why is it that in 2024, planning is more
complicated than ever?
Speaker 1 (00:21):
What role do private labels play in the CPG space?
How?
Speaker 2 (00:25):
do consumer brands separate hype from reality when
it comes to AI?
Speaker 1 (00:28):
On every episode of Shelf Life.
We answer questions like theseand more, with the help of
leaders across the consumergoods industry.
Speaker 2 (00:35):
Today, we welcome Alexis Lozada, Associate
Principal for Supply ChainPlanning at Western Ocker
Consulting.
Previous to joining WesternOcker, Alexis spent decades in
supply chain planning andtechnology at companies like Del
Monte Foods and SAP, where hewas senior product owner for
integrated business planning forsupply chain.
I'm your host, Joel Beal, CEOof.
Speaker 1 (00:55):
Alloy AI and I'm your co-host, Logan Ensign, Chief
Customer Officer at Alloy AI.
Speaker 3 (01:15):
We'll be back with Alexis right after this at Alloy
AI.
We'll be back with Alexis rightafter this.
Supply chain partners and evenyour own ERP, then easily
surface insights to drive salesgrowth.
Every day, brands use Alloy AIto see POS trends, measure
promotion performance and makebetter replenishment decisions
with their retail partners.
That's why we're trusted by BIC, crayola, valvoline, melissa,
(01:42):
doug Bosch and many more.
Speaker 1 (01:42):
Get a demo at alloyai today, all right.
Well, alexis, really great tohave you here, excited for the
topic today, and I think you'vegot a really unique background
to help color and give uscommentary on all things
planning.
So, to get us started, we'djust love to hear from you a
little bit more about yourbackground and how you've got
where you've gotten.
Speaker 4 (02:02):
Well, first of all, thank you both, joel Logan, for
the opportunity to come togetherhere and be able to talk about
our experiences.
So, in terms of my background,I've been in the supply chain
space for about almost, I willsay, 20 years in various roles,
but I was mainly focused onsupply chain strategy, mainly
(02:23):
focused on supply chain strategybasically look at every single
opportunity to drive continuousimprovements of the amount of
supply chain, internally andexternally as well.
But then I moved into the worldof innovation where I worked
with SAP on their newcloud-based supply chain
planning solution, mainlyfocused on inventory planning,
(02:44):
but all along, that's a spacewhere actually the consumer
packaged goods industry.
It's pivotal to them.
I'm passionate about supplychain but, surprisingly for many
, I actually have a backgroundin finance.
That was the start of my career.
I'm an economist by training,so I did spend quite a lot of
investments in that space.
So bring it together.
Speaker 2 (03:05):
The world of finance and operations has been actually
a very rewarding experience forme professionally Excited to
have you on, alexis, I did notknow you are also a recovering
economist.
Speaker 4 (03:17):
I am a recovering economist.
I wanted to work for a centralbank right out of college.
Yeah, I could tell you moreabout that, but that didn't
happen.
Speaker 2 (03:27):
So how do you go from economics thinking you're going
to work at a central bank tosupply chain at Del Monte Foods?
Speaker 4 (03:36):
Well, to make a long story short, I basically
migrated.
I spent my entire career incorporate finance.
I ended up going to graduateschool in Venezuela, got a
master's degree in finance and Iworked for my last job.
That was in investment banking.
But then I moved to the UnitedStates and I decided to reinvent
(03:58):
my career.
I went back to graduate school.
That's when I went to CardiganMellon and then I turned into
supply chain by accident.
I actually was a contractedconsultant by Del Monte to do a
back of the envelope networkoptimization for factory direct
shipment for their, I think,vegetable production lines and
(04:19):
so forth.
But at any rate, that's how Igot into supply chain, because
after my contract with you, Italked to the VP of supply chain
at the time he offered me thejob.
It was a phone call where Isaid, well, we have this problem
.
And I say, hey, look, that's anetwork optimization based on
transportation costs.
That's me the economistthinking, with a lot of the data
(04:40):
science classes that I took atCarnegie Mellon, and I said, hey
, guys, I think I can help youwith that.
Speaker 2 (04:47):
Let's start talking a little bit about planning.
So you're at Del Monte.
It sounds like you did a lot ofdifferent things in supply
chain.
I'm curious what are the bigtrends you see right now?
Speaker 4 (04:54):
So I think the trends that I'm seeing is the planner
of the future will require morequantitative and communicational
skill sets, more centralizedplanning processes, right
Leveraged by technology, and Ithink technology is also, in a
way, it's going to support that,but it's creating a trend set
(05:16):
towards that Planning for supplychain to be specifically, which
I think is what we're talkingabout.
The best supply chains of thefuture are going to be network
aware.
They're going to be end-to-endnetwork aware.
More than ever, planners haveto look at networks within
supply chains and be able todrive benefits out of it.
(05:37):
So think about that for amoment.
When we talk about networks,we're talking about the
connection of distribution offinished goods to customers,
manufacturing processes orassembly processes connected to
those distribution networks, rawmaterial sourcing connected to
those manufacturing processingnetworks, and then the vendor
(05:58):
sourcing right, which is anothernetwork by itself.
All of that is the networkright, and, of course, one
individual won't be able tomanage that overall that's
impossible, right, but it's ateam.
But it's a team that requiresthen have a network view.
That will be the ideal.
What do I say is the ideal?
Because that's the type ofarrangement in terms of the kind
(06:20):
of skill sets for the planners,the type of processes defined,
the type of teams that are builttogether in order to really
take full advantage of thetechnologies that exist today.
They're not being developed,they're here and they're just
being improved upon, but they'realready here.
I just don't think thatprocesses teams are not there
(06:44):
yet.
Speaker 2 (06:44):
Processes teams are not there yet.
So just to recap, you're sayingthis network-based approach and
the technology is there.
It's just more a function ofthe people and the processes to
take advantage of all thetechnology that's been developed
, because, as you said, thesearen't new concepts.
I mean, these have been talkedabout for a while.
Speaker 4 (07:03):
No, and so the trend now is to how to facilitate that
process right.
Ai could play a role there, Ithink, change management and
leadership vision, because to me, is the vision right?
If the supply chain leadershipshares those values and that
vision, it's capable of driving.
You know, people changes,process changes, right it's
(07:24):
capable of driving people.
Speaker 1 (07:25):
Changes process, changes right.
So, alexis is sort of theobstacles you see in this
transformation or optimal sortof planning process more around
organizational behavior than iswhat you see.
Speaker 4 (07:38):
So if you think about change the spark of change
comes from leadership has tohave that view that a supply
chain, in order to really drivevalue and remove inefficiencies,
lower costs, increasedproductivity, that needs to be
viewed from the entirety of thechain.
You cannot just take one valuehere and call it a win when
(08:02):
you're actually passing thatupstream.
A procurement guy cannot say,well, I just saved the company a
million dollars when I'm justbuilding inventory like a madman
.
So that's the traditional case.
So it has to come from thatleadership.
The second aspect of this isthe leadership doesn't
necessarily have to come fromthe executive line or the
(08:23):
executive management of thecompany.
It also says about the cultureof that company A company that
fosters innovation, that fosterscommunication, that fosters
people's ability to communicateopen, even a manager or even a
(08:44):
supervisor, in a culturalenvironment that ideas are heard
of, are consumed, are processed, are taken into account and are
actually put in place.
That's the type of also ofchange that is required right?
Speaker 1 (08:58):
Let's assume you've got organizations that want to
improve, that want to embracechange, but you have competing
priorities From your vantage.
Why invest in improving yourplanning process?
Speaker 4 (09:10):
There are companies that have really good planning
processes, very solid.
What I think is lacking is theability to run scenarios that
can help you understand therange of your potential
opportunities, your upsides andyour downsides.
The ability to understand whatare the elements that really
(09:30):
drive my supply chain, whichones are the drivers that are
really sensitive to my supplychain in terms of their
performance, in terms of impactand service levels, inventory
levels, on-time deliveries andso forth.
Even manufacturing capabilitieson time deliveries and so forth
even manufacturing capabilitiesbut the escenario capabilities
is one that is key to planning.
To answer your question, logan,that to me has been a huge
(09:56):
discovery with a lot ofcustomers in the latest years is
to say, oh, wow, I can run alead time scenario, I can run a
inventory holding cost ratescenario, I can run scenarios on
changes in variability ofdemand.
Oh my God, lot sizes scenariosI can do so.
That is not in the mindset.
It's not as flexible.
Planning is not as flexible aspeople may think.
(10:19):
The technologies are there,like I said, but it's that the
scenario is.
Is that can help you make thatdecision the right decision, not
just to say, well, it'sdeterministic, right and I'm all
a month to month, I'm makingdeterministic decisions.
It's not deterministic and ifyou want to prepare your your
supply chain into the future,it's really more probabilistic,
(10:42):
right.
Speaker 2 (10:43):
And so Are you saying it makes a lot of sense about,
yes, anything forecasting wise,it's probabilistic, right, and
showing those ranges.
I mean I guess you have toforecast to some plan, but it's
good to understand confidencelevels in those plans.
But let's talk a little bitabout the scenario planning that
you're mentioning.
What is keeping companies fromdoing that more?
Speaker 4 (11:05):
Maybe let's go a little deeper on the skill set
requirements that I referred toearlier.
The first one is communicationBe able to effectively
communicate with an audience,because a planner has to
persuade an influence, she or hehas to defend their decision.
That requires communication,that requires even negotiation
(11:28):
skills, influencing people.
So that's number one.
Number two you refer to, joelquantitative.
You don't have to be a datascientist, right?
But you have to have some basicmathematical skills.
If you have some basicbackground in statistics, that
can help you there.
(11:48):
Including the mathematics isalso the ability to understand
business models.
Business financial valuation Ialso think it's very important.
That's how I got in.
To build business casesrequires doing calculations of
potential reduction of inventoryor maybe margin.
It's a little bit of anadvanced topic, but having some
(12:11):
financial analysis backgroundwill be very, very helpful.
The third one is technology,and I'm going to touch the
scenario part of it, right.
If you think about communication, quantitative skills, which in
a way is also analytical skills,if you have those two, then you
start thinking about the whatif?
What if this doesn't work?
What if this doesn't work?
What if this doesn't work?
(12:31):
That is the moment whentechnology can help you to run
in scenarios, but a scenario isas relevant as the person who
conceives it in terms ofunderstanding that this is a
scenario that is valid.
It's not a scenario for runningin scenarios.
I work with junior people thatcome with 20 scenarios and then,
(12:52):
okay, which one is the mostrelevant one, right?
Well, a planner who knows hisor her supply chain, knows how
it works, knows the variablesthat works there, is going to
ask the right questions.
Speaker 1 (13:06):
I'm reminded of a conversation I had with a supply
chain at a publicly tradedcompany.
This was early in time here atAlloy.
A lot of our perspective is youshould be bringing the true
demand signal into planningprocesses.
I was talking to this gentlemanand we think about it very much
from like, hey, let's generatea forecast, that's the best
(13:26):
number, right?
He paused me in the middle ofour conversation.
He said Logan, you're notgetting it.
Planning is a negotiation asmuch as it is a math exercise,
and so as you talked, it kind ofreminded me of this that you're
kind of looking for someone whoisn't purely quantitative,
analytical, because there issort of coalition building and
negotiation and conversationhappening as well.
Speaker 2 (13:48):
So we obviously work and focus on consumer products.
What are you seeing in terms ofchanges in that space?
Speaker 4 (13:55):
The biggest challenge right now is that for some
companies, especially thetraditional CPGs, they struggle
with brands that their value, inmy mind, have kind of gone down
over time because consumerpreferences have changed, the
sales channels have changed Fortraditionally branded consumer
(14:17):
goods, brands that we know, yourparents knew, especially here
in the US.
Your parents knew, yourgrandparents knew, If you think
about it, if you think about it,some brands for your
grandparents that was, that wasthe, those were the iPhones of
the time, right, and so thatbrand image of a green bean Del
(14:41):
Monte can for Thanksgiving, Imean that is that is like buying
the latest iPhone, mindset,right.
So that brand had a value andit has had a value over 100
years, right, but 100 years havegone by and so now our
generation, even the youngergeneration than us, they don't
(15:02):
see it that way because it's notinnovation, it's just vegetable
deliver in a can.
The fact that people are buyingonline more than going to a
supermarket, the fact that nowthere are grocery stores that
are not mainly selling namebrands anymore, you see that the
(15:24):
growth of Trader Joe's, Aldi's,many other outlets that are not
your traditional grocery storeanymore, that has had an impact
in deprecating the value ofthose brands.
I'm not saying that thosebrands don't have value anymore,
but they're struggling, right,they're struggling.
So now that premium price thatused to be there, it's being
(15:48):
challenged and that's why yousee the growth of private label,
right and so private label.
At the time when I worked forPafante, it was like the biggest
enemy, but the biggest enemy,eventually you join the biggest
enemy, because that's anothertrend.
You see that more and more ofthose CPG companies are also in
the business of private label.
I mean, they sell some localbrand of I don't know green
(16:12):
beans that was probablymanufactured by the Monte right
or the competition, maybeketchup, you know, there's a
private level, maybe it'smanufactured by Kraft.
So that, to me, brings anotherchallenge which is and that's a
challenge of today and thefuture for these companies.
Another challenge which is, andthat's a challenge of today and
the future for these companies,is it's no longer about the
benefits that you draw from yourbrands, but it's the efficiency
(16:34):
in which you manage yourbusiness.
You manage your supply chain.
So supply chains have to bebetter managed.
Their priorities have to focuson how do I improve the
efficiencies while protecting myservice levels, Because now
more than ever.
You have to build customerloyalty by a good supply chain
execution which is filling yourorders in full and on time,
(16:58):
right, it's such a competitivespace and it's fascinating.
Speaker 2 (17:03):
As you were talking and you mentioned can of green
beans Del Monte green beansbeing like the iPhone at the
time, I've never thought of itthis way.
I mean, most of my grandparentsgrew up in farms.
I mean they probably went andbought their beans from the
farmer next door, if they didn'tmake them themselves, and it
probably was this marvel oftechnology that I can go and buy
(17:26):
beans in a can.
Speaker 4 (17:27):
And not only that, but then also in countries like
the US where you have wintersright, you bought your green
beans during season harvestseason.
The can allowed you to eat itall year long, right and so that
is innovation.
Speaker 2 (17:41):
It's innovative.
You can really charge a premium.
You build a brand around thatand then, decades later, it's
like beans in a can Anybody cando beans in a can.
Anybody can do beans in a canright and then it switches to if
you innovate, you can, you know, maybe you can ride that brand
name for a while, but eventuallyit becomes stale, comes stale,
(18:04):
and so either you have to havenew product innovation, which
obviously all these consumerbrands are competing on, or you
innovate with just moreefficiency, better supply chains
, and saying we are just goingto be a more operationally
efficient business and we cansell at a lower cost to
competitors.
Speaker 4 (18:16):
There was an underlying topic in the CPG
world that we can talk about.
It's about traceability andvisibility to the end consumer.
For a while there was thattrend that you know I want to
see where the beans come fromand how they were treated and
how they go through the wholechannel.
There is some of that happening, still happening more on the
(18:37):
topic of sustainability Notreally that relevant in the
world of planning, to be honest,except that maybe you need to
plan for different sources ofyour raw materials.
Speaker 1 (18:47):
But other than that I mean that's another trend that
I know CPG suffered through-right, yeah, it's fascinating
this notion that supply chain isbecoming more front and center
as a sales pitch and adifferentiator, right, I'm
reminded of a conversation justa few weeks ago with someone in
supply chain who had said it'swild, logan.
(19:07):
I am now part of line reviewsand this last line review I was
in the first 20 minutes and sowe've seen in that wholesale to
kind of supplier relationshipjust a lot more emphasis on
supply chain and that beingreally, yeah, that key
differentiator in some of thesegments we work with.
Speaker 2 (19:26):
Hey, Logan, do elaborate there.
What is that about?
Is that about the service levelside?
Is it around visibility in thesupply chain, Because that's a
selling point for your productIf it's sourced from farmers in
Peru, for example?
You?
Speaker 1 (19:40):
know.
I think there's something tothat.
In this instance, it was moreabout skew consolidation, I
think, a little more related tothe white label conversation and
suppliers not needing or sorry,wholesalers not needing to work
with a whole'm going to pickthe person to work with who has
a well-run supply chain, highfill rates, because that's going
(20:09):
to be meaningful for me, and so, as I look to consolidate, it's
important for me to work withthe partner.
Speaker 4 (20:15):
So that's a fascinating topic too, because
it's about supplier-manufactureror supplier-distributor
relationships.
Good relationships areestablished not because we met
at a golf club, but because yoursupply chain executes really,
really well, and for me tothrive, I need somebody like you
executing at that level.
(20:37):
I have seen some customerswhere they're planning.
Believe it or not, theirplanning was really, really
centered around vendorperformance.
So who will source faster andmore reliably?
And that will be my vendorright?
Because what happened to themis that they were holding so
much inventory in their supplychain because every single
(21:00):
vendor they had took foreverunreliable, incomplete order
fields and so forth.
More than ever here in theUnited States, with the CPG
industry, that's exactly what aWalmart, what a Target, what a
Kroger.
You know, the largest retailers, but even the bit size or even
smaller, are demanding of themanufacturers is to say be
(21:20):
efficient, be on time, becausethen I'll buy more from you.
I will give you preference overthe competition Because
remember, at the end retailershave to make a space decision
right.
Every store is a retail spacegrind.
So I want to put you here.
I'm going to sell more of youbecause I know I can get that
(21:43):
from you right, I can alwayskeep it filled during
Thanksgiving, during promotions,during holidays.
What have you?
Speaker 2 (21:51):
I'm wondering as I think about brands and the
evolution in retail.
I don't think this is anythingsuper new, but if you're the
larger brands, it's all aboutdriving efficiency, because for
the most part, they's all aboutdriving efficiency, because for
the most part, they're notamazing at product innovation.
And then you've got all thesesmall, newer brands that I think
differentiate in part,sometimes based on how they're
(22:13):
sourcing right.
They're building a brand aroundhey, we're this new organic
product, or we have asustainable supply chain, or
this is a healthier option.
That's really where a lot ofthe innovation is, and obviously
then the big companies try tobuy them up.
We see this happen all the timewith our own customers.
They're constantly gettingpurchased by the big
conglomerates.
(22:34):
They bring them in and theyprobably run.
You know they're figuring outtheir supply chains, let's put
it that way.
That's another trend too.
Speaker 4 (22:41):
That innovation is not coming from inside the
companies, it's being boughtright.
There are other industries thattraditionally do that to grow.
That's happening in CPG,because that's where it's.
When you have industries witheasy entry, yeah, you'll see a
lot of that phenomenon there.
We only have a couple ofminutes left.
Speaker 2 (23:00):
We'd like to ask this , everybody's favorite topic.
Let's talk about AI.
Is it hype?
Is it real?
You obviously work with a lotof companies at Western Ocker.
What are you seeing For?
Speaker 4 (23:12):
me, it starts with the use case.
Right, it starts with theapplication auth.
I cannot say that there is aparticular use case that is
relevant.
Right, there is a lot of talk.
I see a lot of opportunities interms of potentially
identifying use cases, so Ithink we are in the face of
identifying what those use casesare.
(23:32):
I also think that we need to bevery careful to claim that AI
is going to solve all yourproblems in supply chain.
Believe me, If we go back towhat we talked about earlier now
, technology and again AI willstay within the bounds of
technology.
Again, supply chain starts withprocess, people and the
technology that makes you managethe supply chain better.
Speaker 1 (23:53):
Alexis, what I'm hearing it's a little like
Hitchhiker's Guide to the Galaxythat we have the answer of 42,
and now we got to go figure outthe question in supply chain.
Speaker 4 (24:03):
Yeah, and the thing is, if you want to adopt AI,
it's like adopting a newtechnology.
How is this going to help me?
How am I going to work withthis every day?
The human interaction aspect isimportant and so far, the human
interaction that I've seen issearch, what we've been doing
for the last 10 years, since theGoogle search application came
(24:25):
around.
We're just texting and find,okay, let me find this, Let me
find this.
But you could give a planner achat box and say ask for things.
But okay, and then what right?
Technology is as useful as youknow what matters to you.
So when you come to thatinteraction, what's the value?
(24:47):
Right, and where do I start?
I cannot come every day with ablank slate and say so.
It has to be purpose-driven.
It has to be designed with apurpose for the planner, for the
supply chain analyst.
Speaker 1 (24:59):
Well, very insightful there, Alexis.
We're actually at time, soappreciate all the insight.
Covered some really interestingtopics.
No, thank you.
Speaker 4 (25:06):
Appreciate this.
I love this.
Any other topic you want totalk in the future, I'll be
happy to come back.
I know I've done a lot of thetalking today, but I don't ask
questions, as you probably askmore questions.
Speaker 2 (25:21):
We are here to ask questions of you.
People get to hear plenty fromus, that's great, we'll do a
reverse.
Speaker 4 (25:27):
Maybe I'll look smarter if I ask the questions.
Oh, you figured out our trickthere, alexa.
Speaker 1 (25:34):
Yeah, you've been listening to Alexis Lozada,
associate Principal for SupplyChain Planning at Western Ocker
Consulting.
That's all for this week.
See you next time on Shelf Life.
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