Transcript #01: Didier Chenneveau Executive Director Ernst & Young

0:02Radu: Hello everybody and welcome to the first edition of Global Leaders and Supply Chain podcast. I’m delighted to have here with me today, Didier Chenneveau, who is the executive director of Ernst & Young based in Singapore, leading the practice for Asia Pacific and providing advisory services focused on supply chains across the region. Didier is a long term professional in supply chain and logistics. He has served as the CEO of CEVA Logistics in Asia Pacific. Prior to that, he was also a member of the board and chief supply chain officer of LG. As well as prior to that he had a very longstanding career with HP. Didier, welcome and it’s a pleasure to have you with us.

0:42Didier: Thank you.

0:44Radu: So, we have a couple of questions from our audience and from our community. I’ll start mostly on the industry side first and the first question goes like this. How does doing business in Singapore and in Asia differ from the rest of the globe? What makes it unique?

01:03Didier: Well, it’s a very contrasted region so you cannot separate the more advanced market of Singapore, Korea, Japan, Taiwan from the emerging economies. It’s hard to describe. I think you have to really live in the region for a number of years to really appreciate all the cultural difference, language difference, and the business difference.

It’s a growing region so lots of business opportunity especially in the world of supply chain. I would say the emerging countries we have to focus on you know expansion. A lot of multinational, especially Western multinationals for example, being in Indonesia for 20-25 years but basically they’ve been in Jakarta and then they realize that there’s about 240 million people living outside of Jakarta which they’re not really serving and it’s quite far and it’s complicated logistics and it’s complicated supply chain.

So you have to understand all these dynamics. Same thing applies for India, for Vietnam, for Thailand. So for logistic professional and supply chain professional it’s still a very, very interesting region and I encourage your listeners that are maybe outside of Asia to come and have a professional experience here because it’s quite unique.

Challenges for EY clients in Supply Chain

2:25Radu: Yeah, very good point. Thank you for sharing. And if you were to look at Ernst & Young and your clients, what’s one of the key things that they’re struggling right now when it comes to their supply chains in Asia?

2:37Didier: So one of it is what I just mentioned is expansion. The second part I would say is how to master all these new technology that are coming and that are really transforming the supply chain. So some companies have grown very fast in the last 10 years but their processes, their systems are not very solid.

Very often we see what like a land of 20,000 spreadsheet so you’re running a multi-billion corporation on 200 Excel spreadsheet flying around which are not really synchronized which result in service level not being really good. Inventory being too high. So a lot of companies have to come to more system process integration, networking in silo, and really capturing the value of software basically.

So I see a lot of client asking us “how can we do better planning? How can we do integrated business planning end to end that goes from the point of sale data all the way to me placing orders on suppliers and making sure that we have that one version of the truth that everybody’s working on. Not different plans. Not different objectives. Not different metrics. But one single end to end supply chain command.” So those are some of the challenge. Some people are doing now omni channel strategy meaning that they have traditional retail but they’re going online.

Last mile is a big challenge in most of Asia. Many developing countries you have a working class that may be below poverty but still somehow has a cellphone and then is ordering online. How do you deliver to these places that do not necessarily have an address is a challenge so there are very innovative solution in that space as well. We’re helping client do that. And at the other end, very, very sophisticated new technology. I think we’ll talk maybe a little bit later about blockchain technology which is a really new ways of doing things. Revolutionary in many respect. Companies are trying to understand how they can grasp this and improve their operation.

The Internet of Things is another area. Of course everybody is talking about self-driving vehicles, self-driving cars or trucks. How will this impact the logistic industry. I think we still quite a few years away from that. But self-driving vehicle or automated guided vehicle in the warehouse is something more current that clients are trying to understand and master. Very, very interesting and exciting landscape of things that have changed at a rate that I’ve not seen in my last 25 years. We saw a big boom in the late ’90s where everybody was trying to grasp the internet. I would say 2005 to 2015 little bit…things little bit slower but now in last two years explosion of all the new technologies and new ways of doing things that are quite exciting.

5:59Radu: Yeah great, great sharing. And it is probably what we are witnessing and experiencing now. It’s an exponential transformation almost. Technology is of course is always driving it. But probably supply chains as we know it will not be the same in 5 years.

6:19Didier: Absolutely.

Technology trends in supply chain with most impact by 2020.

6:21Radu: And in your opinion since we’re talking about it, which technology trend in supply chain will likely make the most impact by 2020?

6:31Didier: So I think people implementing existing software tools. I think there’s a new upgrade cycle so the major player SAP, Oracle, JDA have come up with a new release of their software. They’re using new, in the case of SAP, in memory technology which is quite powerful. So people are starting to grasp the valuable of this.

We still have lots of companies in the region that have not really invested in warehouse management system (WMS) or transportation management system (TMS). I think those are very important to capture value. In terms of new technology, I think there’s two things. For some clients, IoT and all the capture of data about how an engine is performing. How a factory line is performing and doing all the predictive analytics around this. Trying to predict failure. Trying to predict when parts are going to be needed for replacement is a very growing field and very interesting where a lot of value can be captured. I would say really look carefully about all the sensors you can put on your trucks, on your manufacturing line, on your engines if you’re an airline, on your…if you’re a boat or shipping company. Try to capture that data. Try to analyze it and try to improve your operation.

The second one I mentioned which I think is really transformative, is blockchain technology. It’s going to be huge impact in financial service market and a lot of people are looking at this. I’m looking at it more from a supply chain point of view and how we can use this as a transfer of value and transfer of title…proof of ownership. Lots of companies are working on this. EY, we’re doing many proof of concept with several clients. Looking how we can improve all this in the back office paperwork everything that is related to transfer of value and proof of ownership.

Very, very big demand in that space right now with people trying to figure out I mean sort of it’s a new technology so people are trying to figure out what usage and use cases we can have but this is really emerging as something just as big as…if back in ’95 I would have said this new thing called “www” and it’s the internet and people were just like “OK? Alright.” We probably a little bit at that stage right now with block chain but a lot of companies are identifying use cases and building proof of concept and we’re helping them with that.

Blockchain – how will it impact supply chains?

9:19Radu: Yeah I think it’s very interesting because we did get two questions from our audience and one was specific about block chain and the other one was on IoT so it’s exactly what you mentioned about transformative technologies.

So if you’re to go just one level deeper so blockchain…I think everybody talks about blockchain now. It pops up on the internet there’s an article about block chain. But have you seen, there’s a lot of as you said proof of concepts. But have you seen also some any I mean we have obviously the Bitcoin as well as another implication of block chain but in supply chains, have you seen anything that is almost already implemented or close to being implemented because it also to me (right as maybe I’m not an expert) but it looks like it will take time. It will take time. It takes a lot of synchronized effort from a lot of different parties to be…

10:09Didier: Not really. So we have clients right now that are looking…I mean they’re not looking they’re implementing the technology to verify access to that data. Who can change the data. We have a project where it’s actually somewhat of a treasury project. Who can authorize bank information to be updated in the database and this is actually written to the block chain so of course there’s this notion of consensus once it’s been on the blockchain it’s not changeable, not hackable.

So they’re proof of concept at this time but they are proven to work and then once it’s proven to work, companies will expand. It’s not slideware. It’s actually people are coding things and are actually putting transaction using blockchain technology and we have a number of programs running right now including some very large multinationals that are looking at how to onboard their suppliers, how to receive contact information, how to place orders, how to agree on the price of the transaction and I think you can track and trace of all of this written into the block chain and we use Ethereum which is kind of the platform of choice right now because it enables smart contracts so this whole notion also in the logistic industry when something happens on the block chain and there’s a smart contract attached to it, the payment can be executed based on arrival of those product.

I think Maersk and IBM have a lot of coverage on that. This is a very, very interesting work we’re doing. I think the logistic industry is going to wake up to all of this. Traditionally it’s been a very paper intensive industry. There’s lots of documents and travelling around the world because of international trade with any boat ship. I think all of this is going to be transformed.

12:18 Radu: It will be taken away?

12:19 Didier: Yeah it will. Most of it will be taken away. Some of it will be converted into smart contract which is auto execute based on milestone being reached. I think in the case of Maersk, they’re also looking at automatic self-insurance when the container’s been put on the ship and start leaving, automatic payment at arrival so all of this is enabled by smart contract.

12:41 Radu: Got it. Very good examples. And how about the internet of things…so the question we got from Trish K. Thank you Trish. Has the internet of things actually started changing the ways supply chain operates or is still a buzzword?

12:56 Didier: It does change. We’ve looked at a recent project with a major airline in the region and the amount of data that is captured about the health of the engine as prior to the flight, on flight, and post flight is actually quite staggering and it’s being monitored real time by the engine maker but the airlines also are starting to capture all that, analyze this and it helps them in their parts strategy.

So if you’re able to analyze all this data, able to do the predictive analytics. You can predict failure. You can predict replacement before failure. You can start optimizing your inventory or parts around the world based on flight condition. Based on all kinds of data points that are being captured.

So it’s there again it’s not just the ideas or slideware. It’s actual application where more and more data is being captured and used to improve operation. I think Singapore is doing a lot of things in that respect. Doing more sensors everywhere in the city. Air quality, traffic, electricity consumption, you name it. Smart cities are going to be using all that IoT and are already are. It’s not 30 years from now. It’s not 20 years from now. It’s today.

14:28 Radu: And hopefully to make our life better and easier. And since you’re from originally from France, I heard a story. I don’t think it’s a story actually. It’s an application of internet of things but it’s maybe not the place where you would think to find it. It’s in the wine industry. So basically there are farmers of grapes so basically they have sensors and based on the sunlight and the temperature they activate their sprinklers to put water or not depending on so it’s incredible.

14:57 Didier: Absolutely. Absolutely.

14:59 Radu: Super. Another very good question from Agnes. She was asking before investing in hundreds of thousands and millions of dollars in digital and new tech, if we are to look at the fundamentals of a supply chain, what would that still be in today’s time and age?

15:18 Didier: You still…I mean it’s a good point. You don’t want to sprint before you can run and before you can walk so I just always tell my clients crawl, walk, run and then sprint. So there’s some basic things that you need to having a supply chain.

First of all, you need to have people that have the skill and the understanding how these things work. So it’s just not technology for the sake of technology. Second, you need to have some operating model in place. Who does what, where, and when and you have to be very clear on this. Then you need to have some basic system. There’s no point trying to do sophisticated data analytics if you cannot place an order or if your procurement is not in place or your production planning is not optimized.

So there’s some maturity level that you have to go through. So here we have a couple of tools to tell clients you’re level 1, level 2, level 3, level 4, level 5. And if you’re level 1, this is how you go to level 2. This is what you need to do. This is the sequence and this for each and every step. So of course digital comes probably between level 3, 4, 5 not level 1 and 2. So if you’re level 1, follow the road map to go to maturity level 2 before you jump and spend millions of dollars. I don’t see many clients wanting to jump from 1 to 5 and to say even if it’s a big transformation there’s usually a sequence to it. So I would benchmark myself see what maturity level I’m at and then it’s quite straightforward to say those are the steps you need to take to go from level 2 to level 3.

17:11 Radu: Very, very good point. Actually yeah it’s also a good question because there is a lot of hype about all the words and trends that we’ve talked about but there’s also the reality. Don’t break your neck. Don’t try to do too many things at the same time and take it step by step…

17:26 Didier: You know back to developing markets, if you take the example of warehouse, I’ve seen warehouse where adding a reliable supply of electricity is a challenge. So you fix that before you put sensors everywhere because if you don’t have electricity on a regular basis it’s going to be hard…

17:46 Radu: It’s a bit problematic.

17:47 Didier: It’s going to be problematic. So doing the basics and then upgrading food for the maturity curve is…I’m a consultant at hire to help you do this. I mean, that’s what we do for a living.

Supply chain talent development in Asia.

18:00 Radu: And you know you can help people save on money because they don’t have to make a mistake which can be prevented. And since you did mention that the first fundamental is about people and that’s our business as well at Morgan Philips. It’s finding the right people. There are some questions that I wanted to ask you in terms of talent and supply chain talent and the first one is, what’s your thoughts in general about talent and supply chain talent development in Asia and is there enough supply chain talent in the region.

18:29 Didier: The obvious answer is no. There’s not enough talent. We always struggle to find them. Of course, it varies market by market but there’s not enough in China. There’s not enough in Indonesia. Singapore, because of its educational system, attractiveness, etc. has good supply chain professional. But as you move outside to the rest of Asia it becomes a challenge. I don’t know if it’s because it’s not attractive as a field of study or field of development for professionals or because the demand is just so high due to the growth of the past 10-15 years but we need to make an effort.

We need to train more people in the world of supply chain, planning, logistics. There’s demand out there but those professionals need to be more and more sophisticated, educated I mean, the pace of change is so fast that something that would have been learned 5 years as being the gold standard is no longer relevant. So I think what’s key is lifelong learning and continuous training.

Even I, with 25 years of experience behind me, I’m still spending endless hours upgrading myself, updating myself, reading, following online courses because we talked about block chain a year ago I did not know what it was. You cannot just go in front of client and just put out a buzz word. You have to understand the basic concept of what you’re doing and the technology. So, not enough talent. The talent we have, we need to constantly educate.

20:14 Radu: Upgrade…

20:15 Didier: Upgrade…I don’t really like the word. It sounds like you’re removing a chip and putting a new one or upgrading the software but it’s continuous learning and continuous training and staying on top of things.

 Most wanted skills for logistics and supply chain professionals.

20:28 Radu: Good. And actually, that kind of leads us to the next question which is from Ricardo Dazo. Thank you, Ricardo. He asked “What skills, I think it can be hard and soft, should logistics and supply chain professionals be focused on in order to remain relevant in the future and for the long run.”

20:45 Didier: So on the hard skill I would say understanding analytics is very important. Of course being computer proficient and understanding the big computer technology. If you are an SAP expert, Oracle expert, or JD expert these are huge value in the marketplace. If you can implement a transportation system management, WMS system, and integrated business planning system, you’ll have great value. So those are very in demand skills.

On the soft side, I would say we’ve been in the supply chain we’ve been a little bit like engineers. Technically very competent, but not always very good at explaining what we do. So I would encourage everybody to work on their communication skills and presentation skill. You have to convince people to make those change and so the charisma that you have and the power of persuasion that you have is very critical. So work on your hard skill but make sure your soft skill, people skill, communication skills are good.

21:57 Radu: Yeah absolutely. Absolutely. And the question…since we have to address millennials at some point of course when it comes to talent. Question from Yasir…he’s asking, ”Is the industry ready for millennials and what changes big structured companies need to make to embrace millennials?” It’s a bit of a loaded question but I think the point is about the millennial age.

22:19 Didier: Yeah, I mean, of course. Of course. The companies are ready for the millennials. We have them working with us today. They’re very computer savvy. They’re cellphone savvy. Mobile technology they understand so it’s a great asset to have onboard. A lot of these new companies when it comes to e-commerce or service industry have embraced millennials and piled them into the workforce. Some more traditional companies here in the region going to have to change and be more flexible but I think the global multinationals have taken the challenge and integrated quite them nicely. Of course here at EY we hire thousands and thousands every year and they have successful careers. When it comes to supply chain, I think this mastery of technology, this familiarity with electronic payment, buying online, doing everything mobile from anywhere, anytime is a great asset because supply chain need to be able to do this. It’s a 24/7 economy. It can happen anywhere and they understand that. Great assets to have.

Advice for starting professionals.

23:43 Radu: Yeah, yeah, absolutely. Absolutely. Back to you Didier. You’ve had a longstanding career. By most people’s standards, a very successful career. So if you were to think back and reflect on that, what is the best piece of advice that you’ve received and what’s the best pieces of advice that you receive that you could share with somebody that’s maybe young and just starting?

24:07 Didier: I remember maybe 20 years ago one of my executive I was working for just told me this single sentence. He said, “Always take the high road” meaning when something is in conflict, when something is not working, don’t let yourself drain into that or fight…fighting it. Just take a step back. Look at the broader picture and take the high road. That’s sort of what I’ve tried to do. The career has not been linear.

There’s been a few setback and rebounds. But you learn from that and I think it’s how you grow. It’s how you develop personally. I’ve had the chance of working in 3 continents for extended period of time. I’ve worked 10 years in Europe, 12-15 years in the US, and now almost 10 years in Asia. I think that provides you with a great perspective. I think that if people want to have international careers, they are very fulfilling but they need to be willing to travel the globe and have different experience in different areas. That’s what I’ve personally enjoyed the most is having worked on three different continents. Three or four different, very different cultures. US California then I moved to Korea. Totally different.

25:30 Radu: Absolutely.

25:30 Didier: So those are the chance you have in life and I encourage people to try. The world is still full of opportunity for professionals. Yes, everybody talks about scarcity of work in the future for the fact that artificial intelligence is all going to do our jobs but I still see that as still a far away prospect in terms of replacing some of the human creativity. I think logistic professionals, supply chain professionals are still going to be needed for the next 20-25 years. After that, I don’t know.

26:06 Radu: Absolutely. Absolutely. Yeah everybody talks about AI but let’s…again, let’s…

26:13 Didier: Yeah and I may be wrong. Maybe an AI machine will do my job much better than I could ever do it within a couple of years and that would be fine but there’s still a lot of challenge. There’s twist to technology. Some that are overhyped and that may not come to fruition right away. Right now I’ve been reading very interesting stuff about self-driving car. Everybody say that we’re all going to have one within 5-10 years. Problem is there is still a lot of unresolved issue but this is subject of another conversation. Quite interesting and quite challenging.

26:59 Radu: Yeah and just to add my two cents into that because I think it is relevant once we did have it on the agenda. There’s also a deep social implications. There’s deep policy implications. It’s not…no matter how enthusiastic some people are about it, it’s not something you can implement in a snap. It will take years. It will take years. Great, so coming back to another personal piece of…coming back to the advice. But let’s say there’s a 23 year old graduate in university today wanting to pursue a career in supply chain, what would be one thing that you would tell him?

27:41 Didier: Get as much experience as you can from various industry. Don’t stay in one single industry. I haven’t followed my own advice. I stayed 17 years with the same employer at HP but in different types of job. But I would say try to get as much international experience in different industry sectors. Some of the concept are actually the same. Some of the logic of proper supply chain management apply across the industry. There are some industry specific techniques and buzz word or language that you need to know from each and every industry. If you can, try to do both consulting and a real world job and those are great career builders that provide expertise and eventually some gray hair that people rely upon because then you can provide advice based on the experience you’ve had over the years.

To me it’s still a fascinating field. Maybe it’s not as sexy as some other areas available to a 23 year old now but I think it’s a great opportunity. Great opportunity that the world is changing very fast and it’s changing in the world of logistics, supply chain, manufacturing. Things that are possible now that would not have been possible a few years and there’s going to be a full upgrade cycle in all these companies upgrading their computer system, upgrading software, hardware, automating the manufacturing line, automating transportation. Warehousing it’s got lots of new technology coming. Fully lights out warehouse is a possibility. Lights out planning is a possibility and so people have to create all this. It provides great opportunity for a new graduate.

29:52 Radu: Yeah definitely exciting times ahead and lots to do. Another question is, can you share an internet or online supply chain resource like a website or online course or something that would be relevant to all this and something they can go and learn.

30:10 Didier: I actually use…I have an iPhone and I use “News,” the application “News” and it allows you to select topics and so I put 5G. I put IoT. I put SAP and it gathers all the information from the web around that specific topic and so I find that quite useful rather than going to a logistic or supply chain specific website. I select the topics of interest and get about 20 and this application will aggregate all the news relevant to that and so I find that quite useful. I’ve stayed away a little bit to be honest from all these conference that are popping up everywhere and I think very often are just redundant or don’t provide a lot of value. It’s just general knowledge about business that’s important because you start with a business problem and then you can see what’s the implication to the supply chain and how to solve it. I read the Economist and Business Week avidly because it just opens up your mind to something that’s not just…how do you optimize transportation? How do you optimize planning?

31:29 Radu: Yeah, back to the bigger picture. Back to the bigger picture. High road. Very good sharing. I didn’t know about the News application. I’m going to download it myself.

31:37: Didier: I think you have to be registered as a US user. Some countries it doesn’t work but if you set your region to USA…

31:44 Radu: There’s ways.

31:45 Didier: There’s ways.

 Personal habit for success.

31:46 Radu: We’re in Singapore…there’s ways. One other question, what is a personal habit of yours, Didier, that you think contributes to your success.

31:55 Didier: Wow. A glass of French red wine everyday to keep a proper life balance. I love to travel and I get steam off by jumping up on a bus or a plane and going to visit this incredible region in Southeast Asia. I think among all the people I know here in Singapore, I’m probably the one who’s done the most personal miles. I’m going to visit Indonesia, Thailand, Malaysia, Burma so this is a great region. This is why I love to live in Singapore because we are so close to so many different incredible cultures. That’s how I take some rest.

A memorable story in your career around solving a supply chain challenge.

32:43 Radu: Yeah, super…super. Final question, is there a specific memorable story in your career around solving the supply chain challenge that you could share with us?

32:54 Didier: I do remember. Those were back in my HP days. You know in the US you can buy something so a computer or printer and you have about four weeks or five weeks or a month to return it and I do remember one time we received a memo from the third party repair supplier that we were using to repair our PC’s and it was “Thank you for sending us the PC but there were bricks in the box.”

And so unfortunately we had credited the customer and it turns out the box…the PC had been returned not in the box, but bricks placed inside the box and had been moved from Sacramento all the way back to Nashville where we had our repair center. We had credited back the customer. Then we had spent a few hundred dollars shipping the product around and then we were about to spend a few more hundred dollars repairing it when we found out it was bricks. I think I still have the memo framed in my house of the memo from the third party provider.

But joke aside, reverse logistic is an area we did not talk about. The rise of e-commerce creates lots of reverse logistic challenge and so folks that are interested in that area, it’s a fascinating area of how do you return things. What do you repair? What do you not repair? All the environmental application that it has as well…recycling. This whole area of supply chain sustainability we did not talk about much today but it is a fascinating area where people are going to have to spend a lot of time because we have to leave a better planet. We have to make the planet great again.

34:45 Radu: Yeah. Didier, thank you so much. Thank you very much for your time. For your sharing. For your insights. It’s been a pleasure.

34:53 Didier: It was my pleasure. It was my pleasure.

34:55 Radu: Thank you very much.

 

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