Narrator [00:00:04]:

Welcome to Supply Chain Now, the voice of global supply chain. Supply Chain Now focuses on the best in the business for our worldwide audience, the people, the technologies, the best practices, and today's critical issues, the challenges, and opportunities. Stay tuned to hear from those making global business happen right here on Supply Chain Now.

Scott W. Luton [00:00:32]:

Hey, good morning, good afternoon, good evening wherever you may be. Scott Luton and the one and only Kevin L. Jackson here with you on Supply Chain now. Welcome to today's show. Kevin, how you doing today?

Kevin Jackson [00:00:43]:

Hey man, I'm doing great down in downtown Washington, BC Attorney Government Blockchain Association Conference and I tell you we are talking a lot about supply chain and blockchain and how they work with AI to improve all of that, you know, back end stuff.

Scott W. Luton [00:01:05]:

You know, that sounds outstanding. It sounds very intelligent and it sounds like a place that they wouldn't let the riff raff like me in. You gotta be smart. But hey, Kevin, that sounds great. I look forward to your key takeaways from all those conversations. Hey, but today, big show here today on one of our favorite topics, I think, and that's manufacturing, right? I love the time I spent in manufacturing industry. It really reminded me of that camaraderie and esprit de corps that we had in the military, Kevin, you and I both. So today we're going to be identifying some of the top challenges and priorities that manufacturing leaders are facing right now and into the future.

Scott W. Luton [00:01:44]:

We're going to be specifically talking about the beautiful human factor in the manufacturing industry and how industry leaders are leveraging technology to empower team members to find more success and fulfillment while delivering bottom line success. We're going to be talking about some of our favorite AI use cases as well as what good looks like for manufacturers successfully transforming their organizations on a digital basis. So stay tuned for a great informative, enlightening and I think sometimes entertaining conversation with a couple of wonderful guests here today. Kevin, should be a good show, huh?

Kevin Jackson [00:02:21]:

Yeah, absolutely. You know, some of our best friends are human and they're really worried about that AI. I can't wait to hear what Rahul has to say.

Scott W. Luton [00:02:29]:

Well, see Kevin, your illustrator once all my best friends are human. It sounds like you've got some digital best friends too. I'm jealous. All right, so today's episode is presented in partnership with our friends at Microsoft who's doing some pretty cool things in the industry helping to move us all forward successfully. More on that a bit later. All right, so with all that said, let's introduce our featured guests here today. We got a great one prior to his current role. Our guest earned an MBA from Cornell University and has spent time at companies such as BlackBerry and Toyota.

Scott W. Luton [00:03:02]:

His areas of expertise encompass Industry 4.0, the industrial Internet of things, and one of our favorite topics of course, end to end supply chain optimization and agile and digital transformations. We're pleased to welcome in Rahul Shahani, Partner with McKinsey & Co. And a leader in the manufacturing and supply chain practice for North America. Rahul, how are you doing today?

Rahul Shahani [00:03:25]:

I'm very good Scott. Thanks for having me and great to meet you as well, Kevin.

Scott W. Luton [00:03:29]:

We are delighted to have you here. We really enjoyed the pre show conversations and I can't wait to dive right in. But Kevin, you know we love starting with our fun and warm up questions around here. As I share with Rahul in the pre show I spied a part of his bio which really stuck with me for a second and that is he earned a sommelier certification earlier in his career. So folks, if you don't know that that's all related to the wonderful world of wine and educating and being able to kind of critique wine and Rahul will tell us better. But Rahul, tell us what that is and maybe tell us about your why for doing that.

Rahul Shahani [00:04:08]:

Absolutely. So when I was in school at Cornell, we surrounded in the Finger Lakes region and so there's a lot of wonderful wineries out there. And as I was going through school we'd often visit binaries on the weekend and I was kind of drawn to just learning a little bit more about it took a couple of classes at the school and where the classes always came with tasting portions. And so as a college student you always I want to do more of this and after like a few classes later able to get a certification. But it was really just a fascination of saying how do I better understand this world of wine and just the level of care that goes into making that perfect bottle and everything that goes into it. And then as I got deeper into it, my inner supply chain nerd just got triggered and I just doubled down into that. So I look at the world of say champagne and this process that's a couple hundred years old of what's called riddling is this process of how do you take the yeast out of a bottle of sparkling champagne when you're fermenting the wine in a bottle of champagne itself and the process is basically requires somebody to turn a bottle a couple of degrees every day for a year until it's fully upside down and the yeast settles in the neck of the bottle. It's approximately 200 years ago.

Rahul Shahani [00:05:22]:

As a manufacturing person, you're like, what drove somebody to say, this is how I'm going to make this way of making, making product Absolutely fascinating.

Scott W. Luton [00:05:30]:

Well, so two quick thoughts. And Kevin, I'll get your thoughts. So you're proving for the millionth time, good things come to those who wait. Number one, right? And secondly, whenever we talk wine, one of my favorite movies comes to my mind. And that's sideways. So folks, if you love wine, you love comedy, you got to check out sideways from probably a decade or two ago. Kevin, you had a specific one question. Before we get into everything else we're getting into today, you have a specific question for Rahul.

Kevin Jackson [00:06:00]:

I'm not even going to hijack this interview because when you got an opportunity to talk to an expert, you take it. So, Rahul, I was recently in Milan, Italy. I was doing a little bit of wine. I got an opportunity to taste some orange wine and see, you know, stupid me, I thought wine was made from grapes. I'm in Milan and I'm drinking orange wine. What. What do you think about that?

Rahul Shahani [00:06:32]:

That's really interesting. One of my professors told me that if it's a fruit and has sugar in it, it can be made into wine because wine is a fermented process. That doesn't mean it's going to be good wine, but anything can be made.

Scott W. Luton [00:06:47]:

All right, so that means we're going to have to get Rahul's sommelier's grade on that orange wand. You're going to have to bring it. We'll do this next in person. Kevin, one last thing. Rahul mentioned embracing his inner supply chain nerd. And I think great things come when all of us embrace our inner supply chain manufacturing business nerd, you name it. So, Rahul, I appreciate you sharing a little bit about your passion for the wine industry and the wine process and of course to all the people, the wonderful people that allow us all to enjoy the fruits of their labor.

Scott W. Luton [00:07:21]:

Okay, so I want to shift gears and I want to level set a little bit here because Rahul, you've worked extensively at the really busy intersection of technology, manufacturing and supply chain. Right now when you reflect on your journey, what's been a couple, one or two of your favorite initiatives that you've led or have been a part of?

Rahul Shahani [00:07:42]:

To me, one of the most meaningful initiatives I ever was part of was in the heat of the pandemic, I was working with vaccine manufacturers on how do we rapidly increase capacity. And there was this immense sense of purpose at that point. Being that we just didn't have enough in the world to be able to service at that point, we were thinking it's going to be one shot per arm per year, something we ordered 8 billion doses, if not more per year. And a daunting challenge. And so working directly with many manufacturers as they tried to increase capacity, increase throughput because you cannot install production lines in six months in the pharmaceutical space, that was something that was just like truly phenomenally rewarding because it was a rare time when everybody was motivated towards the goal and just like the purity of the problem was like everybody was trying to solve that. But I would also say that's a little bit of a special case because most often you don't always have that alignment to solve this greater purpose. And as you go down digital transformations or many of these journeys, it really is bringing the right set of people along. But to me, that was one of my tenfold moments and that was how I personally felt I contributed to helping us right through the pandemic.

Scott W. Luton [00:08:59]:

Rahul, I love that response. And Kevin, I don't want to stretch it to a bridge too far, but I love that sense of purpose. He spoke about a very special and unique time, something we'll be reflecting on for a long time. And I'll tell you, in some ways it's a lot like the production ramp up in times like World War II, right from, you know, butter to guns so we can meet the demand and the calling of that time and the pandemic, goodness gracious. And that we're all thankful we're. We're on the other side of that. So, Rahul, I look forward. I know that'll be special experience for you probably the rest of your life.

Scott W. Luton [00:09:33]:

Kevin, your thoughts on, on that moment?

Kevin Jackson [00:09:37]:

Well, you know, it's all about alignment and a mindset. And you know, that was a very rare time where, you know, we all align globally to protect our existence. That's a lesson that we can all work together when it matters.

Scott W. Luton [00:09:55]:

That's right. That's one of the best parts about the manufacturing world. I thought, as you know, Kevin, you were in the Navy, I was in the Air Force. That commitment to mission that would just unify and align and create that camaraderie. One of the few sectors in my journey where I could find similar to that other than the entrepreneurial world, which is pretty, pretty unifying, but is the manufacturing space. So I love that. Rahul. All right, so I want to dial it in now on the manufacturing industry.

Scott W. Luton [00:10:22]:

One of our favorites to talk about. One of my favorites to reflect on. So Rahul, kind of what you were talking about a second ago, but that's just the tip of the iceberg. You work with industry leaders around the world in the manufacturing space. I want to ask you, in your view, what are some of the top challenges and priorities that manufacturers continue to be faced with?

Rahul Shahani [00:10:42]:

It's something that's always very topical. This is definitely something I talk with my clients out about a lot and it changes with the economic winds from time to time. So I think coming out of the pandemic it was very much about resiliency. Resiliency still is a hot topic and something that's top of mind. But at that moment it was the first time we felt the fragility of our supply chains in a very long time. And so that was a topic that wobbled the top. Of course, straight coming out of the resiliency conversation, we jumped inflation because now ingredients and raw material costs started rising really fast. And it's how do I scrap suddenly became it went from being a $2 million problem to a $10 million problem, right.

Rahul Shahani [00:11:21]:

And so that changed the nature of how you prioritized your factories. Was the cost of raw materials dramatically shifted. And so right now there's, there's a conversation in around networks, in near shoring, where should I be investing future capacity in addition to this context of AI? Both from how do I use AI in my in my supply chains and in my factories. And also the AI is driving enormous demand for data centers. So there's a lot of clients that are talking, we're talking with right now are on how do I build more data centers faster to be able to service that massive need for AI compute that's out there. So our data centers can have that critical massive GPUs that we need to service all the AI needs out in the market.

Scott W. Luton [00:12:05]:

I'll tell you Rahul, you have listed quite. We could do a whole series on each of those responses. And of course talent, talent, talent. We're going to talk about that in a second. But Kevin, what I heard there from Rahul, resiliency. I think we all realized how fragile global supply chain is in recent years. Really being honest with ourselves about that inflation, of course, those production shifts he spoke about, right.

Scott W. Luton [00:12:31]:

We've talked a lot about some of the near shoring reshoring activities going on. And he touched on the AI of course, right. The golden age of AI. And in many ways from what I hear 5.5g is going to further unleash that. But one of the interesting things Rahul touched on there that I think needs to be more on radar. Business leaders, Kevin, you and I have done lots of shows focused on the energy industry. And I tell you to gain and to continue to capture all the innovation that AI is driving, that's going to further elevate the need to reconfigure our approach to energy, right? But Kevin, what did you hear there from Rahul?

Kevin Jackson [00:13:11]:

Well, two things. First of all, the leakage, you know, nothing operates independently. Everything is connected to something else. So any leader, especially in manufacturing, have to have your eyes open to what's happening around you. And the second thing I heard there was the need to be dynamic. You can't stay where you are. A static world does not exist. So as things change and one part of your operations is going to affect another part of your operation, it'll go around continuously. So you always have to have your head on the swivel, as they say in the military.

Scott W. Luton [00:13:59]:

That's right. And every day I heard that, that and hurry up and wait.

Rahul Shahani [00:14:04]:

This notion of talent, right, is talent is the way you handle all of these challenges. And that's becoming much, much more important, right? Because as you need to face this construct of resiliency, human ingenuity in the factory or above the factory or outside the factory is the way to absorb that. It's the same thing with inflation. It's the same thing with the talent is your front line for absorbing the change. And gets incredibly hard to find the right talent and cultivate the right talent to be able to respond to the supply chain challenges.

Kevin Jackson [00:14:36]:

Yeah, I think that's critical. I think we always want to look at artificial intelligence or some people look at it as the replacement for human talent. But what you're saying there is that we really need that human talent to lead how we're going to leverage AI?

Scott W. Luton [00:14:55]:

That's right. All right, I want to talk a little deeper here, so let me share a couple numbers here. It might surprise some folks, it may not. So we've all heard that phrase, the great resignation, right? We talk, especially a couple years back, we heard it about every day. And of course, that refers to how in 2021, 47.8 million folks quit their jobs. That was followed by over 50 million in 2022. So here, as reported by the US Chamber of Commerce, some say this is better described as the great reshuffle because believe it or not, hiring rates surpass those quit rates. Many workers were mainly transitioning to find more work.

Scott W. Luton [00:15:34]:

Life balance, flexibility, compensation, you name it, right? Now, of course, the manufacturing industry, despite experiencing what some might call an extended period of stagnant growth, especially here in the States, we still have 622,000 open jobs in the US manufacturing sector as recent as early 2024. So what does that tell you? Well, most organizations understand that we've got to constantly improve our game plan as we compete for the best talent available. So Rahul, when it comes to a holistic talent management approach in the manufacturing world, hire, develop, delight and retain, a lot of folks miss the delight part. We got to engage and create fulfilling, rewarding opportunities. So hire, develop, delight, retain. So Rahul, how are you seeing industry leaders leveraging technology and digital tools, especially AI, to say, overcome this talent gap? We'll start there. Absolutely.

Rahul Shahani [00:16:35]:

So I think I would add to the, to that to say it's higher. Develop, delight and then empower, because that's what drives retain. And I think when we see the people who are the best at this, the leaders in the manufacturing space, they're the ones who are really putting the hands of change into this, into the front line. And this is not a new concept. I mean, this goes back to this construct of continuous improvement that I learned in my early days at Toyota is when I feel that I have agency over my line, agency over the technology I'm getting to use here. I am much more vested and much more likely to continue to stay there, develop and grow this. And I think that's what we're seeing really is those who do this well drive a level of stickiness with the workforce and a level of ownership that makes long lived, high performing individuals work with us, right? And then you see a lot more churn in other organizations.

Rahul Shahani [00:17:28]:

And an interesting story I had, one of my clients had invested very heavily in the frontline experience that they had put together. They had built an application that the frontline could use. They used to say, I can sit on my beach and request my next vacation. And what they found was they were not the top employer by wage rates in the region. But when an employee would leave them and go to their competitor or go to another factory, they would always come back. And it was like my entire life was more holistically connected in the way you work. I was thinking. And being able to drive more agency here than somewhere else, that was really the big unlock for them.

Scott W. Luton [00:18:05]:

So Kevin, two quick points for that Rahul made. First off, I love how he added one more element to the ongoing evolving holistic talent management approach. Being empowered, that's really important. And secondly, and what I Love even more is as he described, you know, this company that focused on the frontline experience. I would submit to anyone out there with plenty of proof and experience in my own journey that if more and more business leaders focused on the in manufacturing or anywhere else on the frontline experience, oh gosh, the world would be a much, much better place. Kevin, what'd you hear there from Rahul?

Kevin Jackson [00:18:42]:

Clearly the importance of self worth when you're talking about your frontline workers, your best workers are those that feel good about themselves and what they're doing. So that empowerment is really as you, as you said, Rahul, the path to retaining.

Scott W. Luton [00:19:01]:

Yep. And you know, top talent these days. We've talked about this plenty, with plenty of proof too. Top talent expect technology in their workplaces and offices and factories and more these days. And that's where I want to kind of go with the second question for you, Rahul, related to kind of how business leaders are leveraging technology, tools, AI, you name it, to in this case boost human worker productivity, employee experience. You just touched on the frontline experience. What else are you seeing? Their role?

Rahul Shahani [00:19:31]:

One of the aspects is what is that drives that human experience in the factory, right. It's easy to think of the factory being a place where you're hands on building something, but one of the most important roles in the factory is the production supervisor. And I was at a factory recently where the production supervisor, as they were going through the transformation had been spending four to six hours a week building next week's production schedule, right. That meant that they were sitting in a room going through a series of Excel sheets versus they were able to digitize that using AI. And we'll come back to that in a second. But what was really fascinating was that they were then able to spend four more hours coaching, training and developing individuals. That frontline investment is what is a game changer in the factory because that's what drives higher productivity, higher performance in a much larger scale.

Scott W. Luton [00:20:19]:

I love it. Kevin, would you rather spend four hours with your people or four hours with a big old spreadsheet?

Kevin Jackson [00:20:27]:

You know me, I'd rather spend four hours with my AI Fruits. No, of course we have pause with people.

Scott W. Luton [00:20:37]:

So all the kidding aside though, the practical example that Rahul just shared, I love it. We all love our spreadsheets and we'll probably still use them till the day, you know, till the year 3000 beyond, right. But there is a better way and that time we can give back to our people within the organization, no matter their role, so they can spend more time on that beautiful human element. That's a great example, Rahul. Share your thoughts there, Kevin?

Kevin Jackson [00:21:03]:

Yeah, building relationships, I mean you don't build relationships with spreadsheets and AI and it's not those tools that are going to be there to support you and give that mutual support. So absolutely focus on your relationships and build mutual building of self worth.

Scott W. Luton [00:21:28]:

Yep. And my hunch is that the production schedule as we leverage more technology and more timely data and other digital tools is probably more accurate than it has been, you know, in the past. And a lot of organizations. It's a summary of spreadsheets from every department, different sources of truth, different truths for that matter, but the power and the gains we can make there for sure. And that's kind of leads me to my next question, Rahul. Related to talent, related to technology and focused on optimizing communication. You know, what's old is new again. Our importance or our ability to effectively and timely communicate and accurately communicate still remains paramount.

Scott W. Luton [00:22:14]:

So where do you see technology and businesses leveraging technology to optimize communication and especially outcomes driven collaboration and maybe even training and onboarding? What do you see there, Rahul?

Rahul Shahani [00:22:26]:

A few examples on this is when it comes to creating onboarding, we've seen a fair number about innovation come from virtual reality and especially inside the pharmaceutical space or the medical devices space where you can put on a headset and one of my clients in Mexico was doing this recently. You could wear a headset and go through the process of making a intricate, complex medical device with zero consequences because you can now try it 10, 20, 30 times to master the dexterity that is required to be able to do this. That allows you to then accelerate your time to get certified. This is critically important as we've seen high churn in manufacturing and when it can take four to eight weeks on somebody to train somebody to make a medical device, I'm now able to do that training much faster, have them even practice it at home without the significant upfront investment I would traditionally have to do. And now that allows me to bring higher performing individuals onto the production line. So we're seeing these tools come out that are much better at what I'd call the augmented operator or the augmented worker. It's the same notion of how do I get the supervisor to spend more time with their employees. It's how do I spend the operator to spend more time doing the critical thinking and the critical outcome based orientation rather than the routine?

Scott W. Luton [00:23:47]:

Yeah, and we've got to turn to technology to be able to do that. We've got to. Kevin, I love the example Rahul talked about because so many different roles, especially across global business, but especially in these production environments, the dexterity and the nimbleness and the skill levels are really off the charts in many of these roles. So I love his example of leveraging technology. In this case, I think it was virtual reality, probably headsets and whatnot to reduce that ramp up period from four to eight weeks to who knows, maybe two or three weeks. Kevin, what'd you hear there?

Kevin Jackson [00:24:24]:

Yes. No, let's take a second to sort of hone in on that communications aspect. I mean, as we adopt technology, we have to really focus on how we communicate without our fellow humans. When you're using VR and ar, that's going to affect how you communicate, how you connect with humans. It's similar to like when we started using email, you know, Remember I'm sure you've heard stories about people, you know, complaining about being yelled at over email because somebody used all cats. It may have been just a stuck cap lock tea. You know, you can't apply emotions to a sheet of paper. So as we adopt technology, we're going to have to not apply emotional value to the technology. You know, this is why communication is so important.

Scott W. Luton [00:25:27]:

That's right. And Kevin, you can use whatever excuse that you want to. I know you're, you're yelling at me via email. So. But kidding aside, kidding aside, you know folks, I hear all the time, Scott, Scott, you talk about decision making all the time. You're like a broken record. And when I think about communication and collaboration and technology, you know, what's old is new again. Being able to put not just our front line, the whole business in position to make faster, better, smarter, more confident decisions.

Scott W. Luton [00:26:03]:

I'm going to keep beating that drum for the rest of eternity because that is a big part of what success looks like. All right, so let's shift gears. Speaking of success, I love seeing these powerful new use cases for AI almost every day, especially in those focused targeted applications, right? Not, not the organizations that say I got to have AI door defense, you know, no one has it, you know, focused, targeted, especially in supply chain manufacturing. Lots and lots of use cases there. We've seen transformational gains with AI being made in planning, inventory management, quality management, middle and last mile delivery, customer experience and engagement. Heck, I had an AI application take my pizza order here recently. It's incredible. All that much more.

Scott W. Luton [00:26:53]:

So Rahul, going back to you when it comes to especially overall operational efficiency gains, cost reductions, what are a couple of your favorite Recent AI use cases.

Rahul Shahani [00:27:03]:

There, I'd say one of the ones that surprised me the most recently and just I was just excited by the nature was beside the scheduling application I spoke about earlier, this was a factory that was about 100 years old, unionized environment in the Midwest, and they used AI to digitize the collective bargaining bridge they had negotiated with the union, right. And what was beautiful about that was they were able to say, here's the people who are available to work next week now following the tenure, the skilled matrix and everything else that's there. What is the right, perfect, optimal schedule. And once you did that, it meant the schedule was done in like 15 minutes. But more importantly, it meant that the employee grievances went way down. The fines there, the company had to pay because of grievances, because of mistakes made in the schedule were dropped by eight figures, right.

Rahul Shahani [00:27:54]:

And so to me, that was this nexus of a really unique underinvested area where this factory was able to say, I want to deploy AI and completely change the experience of both the frontline worker, the supervisor, as well as the finance team was also happy because they weren't paying the fines anymore, right. It was one of the most exciting examples I've seen in a while.

Scott W. Luton [00:28:16]:

And unique, you know, here in the age of a bunch of labor wins, right? Gosh, we've talked a lot about that, Kevin, on the buzz for years now. And it's going to continue, right. As we all try to strike that balance. That's the first time, Rahul, I've heard of an application where we're taking is driving down grievances, it's driving down those fines, it's making the wonderful workforce happy, right. They're getting those concessions that they need, leveraging technology, which is like kind of helping to automate and optimize the brokering, finding that consensus.

Scott W. Luton [00:28:50]:

And of course the management team, the financial leaders are happy because their costs are going down.

Kevin Jackson [00:28:56]:

Kevin, what you hear there, I hear technology improving communication, right? You're leveraging technology so that people can communicate with humans better and reduce the friction and improve the clarity of education.

Scott W. Luton [00:29:14]:

If we can take technology and apply it worldwide far beyond industry and help humanity find more common ground. Oh my gosh. The places we could go, right? Rahul, any other use cases you'd like to share with us related to AI?

Rahul Shahani [00:29:31]:

I think right now the use case I'm seeing get deployed a lot and I'm seeing a lot of excitement around is the digital twin, and I know that's a term used far and wide, finally reached the nexus, where large companies have enough of their data organized, structured and cleaned up and where they don't generate AI is helping fill the gap where they're able to now start doing meaningful what if analyses, meaningful trade off analysis using the digital twin and really understand the consequence of making decisions upfront. And these are decisions that are affecting frontline talent and how I think about factories and so forth and making those informed decisions are, is really changing the way the top team is thinking about how they manage the strategic side of the supply chain and the factory.

Scott W. Luton [00:30:15]:

Yeah, Rahul, I agree with you. And you know, and also removing a lot of decisions that humans have been asked to make, we can automate a lot of that and free up their time like we were talking about earlier. Rahul, Kevin, what did you hear there?

Kevin Jackson [00:30:29]:

Well, how that digital twin aspect, I mean I think we're moving forward in that we're identifying data that matters and then we're leveraging, storing that data, aggregating it from different collection points and then reusing it to do better the next time. So I think that the digital twin we're only, we're just at the beginning of the power that we'll have on our supply chains and our manufacturing lines.

Scott W. Luton [00:30:59]:

Excellent point, Kevin. Completely agree. And Rahul, it's interesting, I love how you opened up talking about the digital twin because we've heard that phrase for a long time. But I think as it relates to a lot of these technologies we've heard about for a long time, they've continued to evolve and become more powerful and the full advantage of using these technologies is still being unleashed. Now with all that said, I got to share with you, my dear wife Amanda has warned me the world cannot handle a digital twin of me and she's not going to tolerate it. So anyway, big thanks to Manda, the whole team behind the scenes helped make production happen here. All right, so let's shift gears. Rahul, I checked out your keynote from earlier this year at the IoT Solutions World Congress 2024.

Scott W. Luton [00:31:49]:

We're part of what you described. There was your team's journey to define what good looked like for especially for manufacturers that are driving digital transformation, right. Again, that's not new, we know that, but it's continued to evolve and mature and we've got so much more information on how to do it so much more successfully these days. So if you would tell us briefly about that as well as this lighthouse program that you referred to as part of your keynote.

Rahul Shahani [00:32:20]:

Absolutely. So we're thinking about the role of digital Transformation and digital and manufacturing. And going back about five or six years ago, it was really hard to say what does good look like, right? If I think about the word of lean, it's a little easier because it's saying, look at Toyota, right? And as somebody who grew up at Toyota, that was the benchmark for what lean manufacturing was. And it was the. It was for the emulators. And that was well studied and well reported. We just didn't have the same analog and digital. So we said, what would that analog look like? And so we partnered with the World Economic Forum to establish what we call the Global Lighthouse.

Rahul Shahani [00:32:55]:

Analog is we scanned through about 1,000 factories at first and identified a team that said that they really applied technology in a distinctive way. And it's not about a unique use of technology as much as it's about, I'm driving a change in business performance through technology. I'm getting the front line to change their behaviors. I'm getting the dollars in the business to change. I'm meaningfully changing the way I ran the operation very similarly to how Toyota meaningfully turned the construct of how to run an assembly line on its head. So that was what we were looking for. We've periodically done that every six months, gone out, looked at new factories and continue to build a view of what does the cutting edge look like right now, by the end of the year, we will have about 200 lighthouses and we'll have scanned about 10,000 factories over the last six years. But it really helps us, as we talk to manufacturers, understand is what does good look like? And because there's so much information out there, what we really say is, and I personally look at it as my mission is how do I have 10 million factories digitized and get to a new horizon of capability in the workforce? That will happen when we implement digital, right? We walk through too many factories where this stack hanging on the walls and somebody says, somebody put that in there.

Rahul Shahani [00:34:15]:

We don't use that. And to me that's, that's just a shame because it means it's this great technology that just was never utilized properly. And so part of what we look for is how do we showcase great technology used in a impactful and meaningful way that we can then bring that those 10 million factories along.

Scott W. Luton [00:34:33]:

If we could spend a whole series of shows probably on Yalls experiences, walking through what I think I would have heard, there's 6,000 factories in recent years as part of this lighthouse program initiative. What you just talked about, kind of that one factory where they've got certain tools there, but they're not being utilized. It sounds like we've got to add some more definitions of waste, right? Because that means many things. And I think we parted add a few more as digital transformation has really taken more root. But, you know, learning to see one of the things I heard there, Kevin, from Rahul, is like my dear friend Mark Preston used to talk about, especially when it came to lean, can we get our leaders and really all team members to learn to see waste? How can we help our team members in this case learn to see successful digital transformation? Because once they see it right, these benchmark organizations that Rahul and the team identified that really are doing it right, once they can see that, it's so much easier to replicate it and proliferate it and help more organizations achieve it. Kevin, what did you hear there from Rahul?

Kevin Jackson [00:35:42]:

Well, you know, it really raised her mind. The pre pandemic time for Whitney, you know, these zoom web conferences and team meetings, it's been around forever. But pre pandemic, this was technology for communications and just sitting on a shelf. People would still just rather use a phone or get on an airplane and waste time to go for a meeting somewhere. Although that is fun. But then when we were forced to leverage these tools during the pandemic, we were forced to learn how to adopt change. We had no source and humans don't like change. So pandemic sort of forced us.

Kevin Jackson [00:36:34]:

And now post pandemic, this technology is all in use. You sit down in the morning and you're on teams or zoom calls all day. But they are accelerating the thought processes. They're improving. It's improving communication. And that technology that was sitting on the shelf that people said, oh, we don't use that. We'd rather get on a plane or use a telephone, is now being used to accelerate all types of businesses in all types of ways. We have those technologies right now sitting on the shelf not being used.

Kevin Jackson [00:37:15]:

Other types of technologies like VR ar, people say, ah, no, that's too hard. That's change. I don't want to drink change. Well, you have to embrace change, right? You have to look forward to different things or that technology just won't get used.

Scott W. Luton [00:37:36]:

Kevin, I'm with you, but we got a strike in your analogy there. We got to strike the airplane and we got to talk about folks who rather take the steamship or take the horse and buggy over to me. We got to backdate some of those references. But well said there, Kevin. Well said, tremendous opportunity. And you talked about change and that was a big part of Rahul's comment earlier. Change management. There's perhaps, perhaps there's been no greater emphasis on change management in business these days, especially given the velocity of the market and the velocity of innovation, velocity of risk and challenges and you name it.

Scott W. Luton [00:38:16]:

So that's where we'll go next. Rahul, actually, before I ask you about some advice, any final thoughts on the Lighthouse program, where it's going next, maybe how folks can get involved. Anything you want to share there?

Rahul Shahani [00:38:28]:

Absolutely. So I think where we're going next is we've done digital productivity with Lighthouses for six years. We're now extending that to talent because the talent innovations we're seeing out there are absolutely critical and we want to go out and celebrate those and put a spotlight on those so many other organizations can see and learn from them. And we're also extending it into the world of sustainability. We're talking about circularity and decarbonization because that is something that is emerging as top of mind for most chief supply chain officers. And how do we help again collectively get 10 million factories to become a lot more sustainable and a lot more efficient?

Scott W. Luton [00:39:07]:

I can't wait to see the fruits of Yalls labor and uncover companies that really are world leaders. As you're talking about talent, engagement, circularity, sustainability, I mean those are some of the issues of our time for sure. We're going to get some advice from Rahul here. You've worked with all kinds of organizations from what you were just describing to earlier parts of our conversation, especially those that are navigating their own digital transformation. So what is a key piece of advice or two that you'd offer for manufacturing leaders that are either early on in their journey or they're right in the middle of it?

Rahul Shahani [00:39:44]:

I think when I look at my clients who've been the most successful at this, it always comes down to one thing. It is always the people, right? It is either the technology team that is going out or the change team that's going out and deploying the tools, deploying use cases and making that change happen. Where if you investing upfront in that is absolutely critical or the second is investing with the front line to help change those mindsets and behaviors. It's not just putting the tech out there. It's about rethinking the work process and shifting the mindset of how to think about technology not as a threat but as a partner to you as you go on, as you continue your day to day work.

Scott W. Luton [00:40:24]:

Rahul I love that for the people. Kevin for the people. And adoption is so important. And one of the ways we unlock that the adoption challenge is answering successfully the wifm, what's in it for me, right? And we've got a long way to go to really enhance, optimize adoption rates. Kevin, your thoughts on the advice we just heard there from Rahul?

Kevin Jackson [00:40:46]:

Don't be scared. Technology is there to help humans not report race heroes. So, you know, don't be afraid of change. Embrace change. If you're uncomfortable, that's the right place to be.

Scott W. Luton [00:41:05]:

Okay. I love that you gotta get out of that comfort zone no matter where, where your role is in the organization. Were you about to add something?

Rahul Shahani [00:41:11]:

Yeah, I was gonna add something. I would go a step further to that because I like, I love what Kevin said. I would say if you're somebody who is seeing technology as a changing in your workplace, ask the hard questions to the team that's making the change. What's in it for me and how is this going to make my life better? Because they need to be able to anchor those questions to you for this to be done right and implemented in a way that's going to drive impact.

Scott W. Luton [00:41:34]:

Excellent. Back to communication, back to the value proposition for our team members, right. And what you just shared there. We'll also brings to mind a phrase, Kevin, you and I have talked a lot about is instead of doing change to your people, do it with your people. And that requires us answering those tough questions as we should. All right, so Kevin, I'm about to come to you for one of your favorite. There's a truckload of takeaways from this conversation, one of your favorite, and of course we're going to talk about some of the cool things that Microsoft's doing out in the manufacturing industry. But before we do that, Rahul, I know you stay busy on the road. I think the incredible city of New York is home base for you, but you're on the move. How can folks plug in and connect with you and learn more about some of the things you described here today?

Rahul Shahani [00:42:25]:

I think the best way for people to find me is on LinkedIn. I'm on there. I'm very active and so absolutely reach out to me on LinkedIn and let's start the conversation.

Scott W. Luton [00:42:35]:

Awesome. We're going to include that, make it really easy in the show notes. We'll probably also include your keynote we referenced earlier so folks can learn more about what good looks like, what great looks like in your efforts there with the Lighthouse program. So really appreciate you being here, but don't go Anywhere just yet. Kevin, Rahul has brought a truckload, maybe a container load, maybe a container ship load of thoughts and eureka moments here today. What's been one of your favorites and what's your take on the good stuff that Microsoft's doing out there in the manufacturing industry?

Kevin Jackson [00:43:07]:

There's a thread going through all of the points that Rahul was made throughout the interview and it's about how technology actually augments and helps humans. It's not something to be to fight against, it's something to embrace. And it's up to the manufacturing leaders to really understand that, you know, manufacturing, you know, has a history of not adopting technology fast and they were forced, just like many other industries to change during the pandemic years. But they've learned and they're moving forward. So if you're in manufacturing, you have to move with them or you're going to fall way, way, way faster. And this is why I really like what Microsoft is doing and Microsoft AI specifically because this offers untrusted access to information that can help solve complex manufacturing problems much faster than before. In fact, Microsoft attended the International Manufacturing Technologies show in Chicago just a few months ago and they showed how Microsoft and its partners are accelerating industrial transformation with AI. They're enabling their customers to design better products with AI powered insights using and leveraging generative design and AI enabled solutions like predictive modeling and digital twins that was mentioned earlier, we can really analyze real time performance data.

Kevin Jackson [00:45:00]:

But that also enables their customers to use AI to build better, smarter products. Because with the generative design you can do this predictive modeling and be smart with AI optimized manufacturing, okay, the merging of physical assets with AI, IoT or Internet of things and automation is enabling manufacturers to really optimize production and finally modernize frontline operation with AI assisted workers. Okay. When empowered by AI, these workers become decision makers and they're free from the repetitive tasks. AI really allows frontline workers on the factory floor to the field to focus on higher value activities which improves their productivity and makes them feel good about what they are doing. So, you know, jump on the bad.

Scott W. Luton [00:46:13]:

Word, you gotta get with the program. That's right. A lot of what you know, you and Rahul both have shared here today. Better handling complexity, getting time back. We can't, you know, we can't do enough of that. Better handling change, providing for more successful growth and innovation and product development and circularity and sustainability. All of that and a whole bunch more. But my favorite, just to wrap kind of spike the football on this, my favorite going back to how Rahul added to that simple holistic talent management framework.

Scott W. Luton [00:46:50]:

You know, it's not good enough just to delight our team members, right. But we've got to empower them, right? And that's what you just touched on. That's what Rahul touched on earlier. It's so critically important. And technology plays a unique and powerful aspect of how we do just that. So really enjoyed today's conversation. Really did. Rahul Shahani with McKinsey & Company. Thank you so much for being here, Rahul. We look forward to reconnecting again with you soon.

Rahul Shahani [00:47:18]:

Thanks, Scott. Thanks, Kevin.

Scott W. Luton [00:47:19]:

You bet. Kevin L. Jackson, host of Digital Transformers, where you can get wherever you get your podcast. Kevin, always a pleasure. Thanks for being here with us.

Kevin Jackson [00:47:28]:

No, thank you very much. This was great and I've learned a lot. Thank you. Thank you for joining us.

Scott W. Luton [00:47:34]:

I've got 27 pages of notes today. And so, Rahul, don't give me a quiz later though, okay? Don't give me a quiz. But folks, hopefully you enjoyed this conversation as much as I have. I tell you what Rahul and Kevin delivered here today. Big thanks to all of our listeners and viewers across the globe. Y'all are exactly why we do this. Jump out of bed, do this every single day. Give us your feedback.

Scott W. Luton [00:47:56]:

Keep it coming. Big thanks to our collateral partners over at Microsoft as well, helping to bring conversations like this and more importantly, these ideas and proven best practices to our global audience. You got homework, folks. You got homework. All of our wonderful audience members out there, you got to take one thing that Rahul or Kevin shared here today. You got endless selection of variety. Take one thing, put it into practice. Let's change how business is done.

Scott W. Luton [00:48:22]:

Your people are ready for it. They're craving it. But it's all about deeds, not words. So with all that said, on behalf of the entire Supply Chain now team Scott Luton challenge you - Do good. Give forward. Be the change that's needed. We'll see you next time right back here at Supply Chain Now. Thanks, everybody.

Narrator [00:48:39]:

Thanks for being a part of our Supply Chain Now community. Check out all of our programming at supplychainnow.com and make sure you subscribe to Supply Chain Now anywhere you listen to podcasts and Follow us on Facebook, LinkedIn, Twitter and Instagram. See you next time on Supply Chain Now.