The Future Is... The Global Supply Chain and What's Next

Summary

Highlights

• Honeywell has decreased its dependency on single suppliers, moving from 90% to about 60% single-sourced operations. 🔄
• AI has been implemented to enhance both customer experience and technical support within Honeywell's supply chain. 💬
• A dedicated roadmap until 2030-2035 aims to fully decarbonize Honeywell's operations using advanced technology. 🌍
• Digital transformation requires a comprehensive and gradual approach, harmonizing data infrastructure is key. 🛠️
• The next big leap for supply chains is towards autonomy, treating it as a mathematical solution space. 📈

Key Takeaways

• Supply chains have evolved significantly over the past few years, increasing resilience through reduced single-source dependencies. 🔗
• AI integration in supply chains is enhancing customer experience and technical support capabilities. 🤖
• Sustainability and decarbonization are key focus areas, with Honeywell using its own technology to spearhead these initiatives. 🌱
• Digital transformation is a long-term, company-wide effort crucial for successful adaptation and competitiveness. 💡
• Autonomous operations represent the future of supply chain management, thanks to advanced data and AI capabilities. 🚀

Overview

Chapters

• 00:00 - 00:30: Introduction The chapter titled 'Introduction' is part of a podcast named 'The Future Is', hosted by Laura Kellerer, who is Honeywell's Chief Marketing Officer. The episode focuses on the current state and future of supply chains. The guest for this episode is Torsten Pills, Honeywell's Senior Vice President, who will discuss the evolution and future trends in supply chains.
• 00:30 - 01:30: Current State of Global Supply Chains The chapter discusses the current state of global supply chains as explained by a chief supply chain officer. The speaker acknowledges the challenging nature of the past few years but notes signs of normalization within supply chains. The chapter implies that while difficulties persist, the situation is improving with certain trends driving this positive change.
• 01:30 - 02:30: Honeywell's Supply Chain Transformation The chapter discusses Honeywell's efforts to transform its supply chain to become more resilient, having learned from past crises such as the semiconductor shortage. While acknowledging that the world will not revert to how it was a decade ago, Honeywell is focused on optimizing its supply chain operations to ensure stability and foster growth amidst ongoing global changes.
• 02:30 - 04:30: Use of AI in Supply Chain The chapter discusses how Honeywell managed its supply chain, highlighting a significant reliance on single sources of supply. Originally, about 90% of their supply chain was single sourced, which posed risks due to high dependency on specific suppliers. In a strategic shift aimed at improving productivity and reducing exposure to single points of failure, Honeywell restructured their supply chain, reducing single sourcing to approximately 60%. This transformation involved considerable time and effort, focusing on diversifying their supply base to enhance resilience. The chapter reflects on the strategic changes made to improve supply chain management and the role of AI in facilitating this transition.
• 04:30 - 06:30: Sustainability and Decarbonization Efforts The chapter discusses the integration of AI in enhancing sustainability and decarbonization efforts. A year prior, there was already a strategic approach to identify areas where AI could be implemented to optimize processes. By analyzing the entire supply chain from start to finish, approximately 200 potential applications of AI were identified, illustrating a comprehensive effort to leverage technology in making systems more resilient and efficient.
• 06:30 - 09:00: Advice for Supply Chain Transformation The chapter discusses the transformation of supply chains with a focus on the deployment of various use cases and technologies like AI. The transformation begins with improving customer experience through a co-pilot system that assists agents in accessing customer information and order status efficiently. The aim is to identify beneficial impacts and hasten deployment across the supply chain.
• 09:00 - 11:00: Autonomy in Supply Chain This chapter discusses the deployment and use of autonomy in the supply chain field. It highlights two primary use cases: the first, which was fully implemented last year during summertime, and the second, aiding technical support staff in quickly finding necessary technical information to resolve customer issues. Both implementations happened concurrently and showcased promising results. Looking ahead, the commitment is made towards integrating autonomy across all subfunctions within the supply chain, including procurement planning.
• 11:00 - 14:00: Opportunities in Supply Chain Careers The chapter outlines the potential and first-mover advantages in incorporating AI within logistics and supply chain operations. There is an emphasis on the future-oriented nature of AI as a technology, noting its cost-effectiveness and the significant experiences it offers. The speaker acknowledges a fear of missing out (FOMO) as they believe other companies might deploy AI, but highlights Honeywell's leading position in adopting AI at scale and speed, which is considered unique in the industry.
• 14:00 - 18:00: Supply Chain as a Growth Driver The chapter focuses on how supply chains can act as a growth driver. Key points include empowering employees by providing them with accessible information, highlighting the importance of sustainability, and aligning business structures with major trends such as the energy transition. There is a strong emphasis on reorganizing company operations to address these evolving trends, marking sustainability as a core focus.
• 18:00 - 21:00: Personal Career Journey The chapter titled 'Personal Career Journey' includes a discussion about sustainably operating and decarbonizing operations using current technology. The speaker mentions progress made over the last few years and outlines a road map to completely decarbonize by 2030 or 2035. They describe having strong plans for the coming years and emphasize the development of substantial programs to reduce carbon emissions.

The Future Is... The Global Supply Chain and What's Next Transcription

• 00:00 - 00:30 [Music] Welcome To The Future Is podcast where we meet the people shaping what's next in business and life I'm your host Laura kellerer honeywell's Chief marketing officer in today's episode it's all about the world of Supply chains what they look like today and what's coming next and joining us is Torsten pills honeywell's senior vice president and
• 00:30 - 01:00 Chief supply chain officer to share his expertise and insights welcome torst it's great to have you here today well let's talk about Global Supply Chains It's been a challenging few years a lot going on what are you seeing today current state and uh the trends that are driving things yeah um thanks for having me uh Laura but um I think um last couple years were pretty challenging and but I do think we see some sort of normalization again so things are still
• 01:00 - 01:30 constrained in some areas of the world and some businesses but uh you know the semiconductor crisis behind us so we lived through that uh learned a lot made our supply chain operations more more resilient but I do think um I don't think we go back to the World As We Knew It 10 years ago but uh things starting to normalize looking at Honeywell you know how are we Transforming Our Supply chains to be more resilient and also to drive growth yeah historic Ally
• 01:30 - 02:00 Honeywell had um a supply chain that was primarily focused around um single sources of supplies so we were very exposed to single suppliers um Sol sourcing and we've done this over many years just just to drive productivity and we changed that um approach completely so we probably now are maybe 60% single sourced we used to be almost 90% single source so so we really spent a lot of time and effort to make our supply chain
• 02:00 - 02:30 more resilient more stable and to um hedge our bets a little bit and then uh new technologies um how is AI coming into the picture oh um you know AI is all the rage and um but um we about a year ago we already started thinking about where can we actually use this what's the what's the use case so what we've done is we looked at our entire supply chain end to endend and uh we mapped it out and we came up with probably 200 use cases and it's a it's a
• 02:30 - 03:00 it's a massive amount of use cases so then we um compared this to what are potential impacts so where can we actually have benefit how quickly could we deploy things like things like Ai and um so we started in customer experience actually and we started with a customer experience um some sort of a co-pilot that helps an agent to find out order status to find out what they need to know about a certain customer and um we deployed with we starting to deploy this
• 03:00 - 03:30 in the summertime of last year and we are fully deployed now so that was the first use case the Second Use case is uh where we help our um technical support people to find the technical information when they have to solve a problem for a customer and we did this at the same timeline so I do think um those are very very encouraging uh um examples and results and uh for this year what we made a decision that every subfunction in supply chain like procurement plan
• 03:30 - 04:00 Logistics has two to three use cases they have to uh deploy AI to um because um we feel it's the future it's a new technology um experiences are awesome really they are really awesome um it's not very expensive to deploy this and I actually have a little bit of formal here because I know somebody will do it and uh this is a first mover advantage that that I believe we have as honey well I don't I'm not aware of any other company that does that at that scale and at that speed mhm great I I love the
• 04:00 - 04:30 examples you gave too of empowering our people that's right you know to have information at their fingertips and um be able to answer questions quickly um what about sustainability how do you look at that yeah I mean you know that's that's another Trend and um as as you know we have reorganized our entire company um around Mega Trends and the energy transition is is one of them and uh you know we as a big operation we um have always thought about sustain what
• 04:30 - 05:00 are ways to more sustainably operate uh the the the good news is we can use some of our own technology and I get to play with all the tools um firsthand and uh we made a lot of progress over the last couple of years but we have um a road map until 2030 or 2035 how to completely decarbonize our operation we have a really strong plan for this year for the next two three years and we're working on on really massive big programs how to carbonize operation which is not not
• 05:00 - 05:30 easy everybody can understand to to let's say create sustainable electricity um solar panels I mean that that's what everybody knows but if you have large burners furnaces there are natural gas power so how do you decarbonize this and those are big programs that um we and IC um are taking on um we in the company have set aside a special uh capital budget for this to help um decarbonize
• 05:30 - 06:00 the company over the next couple of years and we have to do this because you know our customers want that the same technology from us so it's it's very very important for us that we are uh very Progressive there and that we are Trail BL Blazers and just just on our own right yeah so honey well on honey well that's right we're we're using our technology to achieve the same goals that we know our customers need to meet exactly yeah and methane as well right you talked about decarbonization right methane is another big one methane Natural Gas you know all all these um
• 06:00 - 06:30 you know non-electricity kind of sources of greenhouse gases uh refrigerants think about we have an awesome refrigerant business with very very low um um potential greenhouse gas potential and uh we we are on a on a on a on a huge program to really um revamp our entire operation using all these new technologies nice and I I love the uh the commitment right securing budget I mean supply chain is a it's it's a competitive Advantage um and um it's
• 06:30 - 07:00 it's it's great that we're investing like this in in supply chain Excellence thank you yep um when you think about you know sharing advice maybe with some other leaders out there who are trying to transform their supply chains what do you what do you want to tell them yeah I mean it's I talk to uh colleagues and other companies all the time what they do and what we do and uh there's one thing I believe um in particular when it comes to a digital transformation I do think we are really a leading um leading
• 07:00 - 07:30 company out there I don't I'm not aware of any other large scale Industrial company that does it at that speed and at that scale well that's the good news um the other good news is uh we also learned a lot and others can probably benefit from this and I get this asked this question all the time and and um you know you have to think about this as a multi-year Endeavor there's no such thing as just kind of quickly transform something that's not how this works it's not real you know incremental
• 07:30 - 08:00 Improvement we're really talking a transformation and the first step you want to take is in particular to simplify and harmonize your data infrastructure and we've done this a couple of years ago and we've building on this now for probably two three years you know our our employees know the term edw the Enterprise data warehouse and that's a foundational building block to do this and once you have this then you can really go into what are transactions what are decisions that you want to
• 08:00 - 08:30 digitize and and and move forward with this so so my my my take always is it takes a lot of hard work and it takes a lot of time and you need commitment for um of of for the entire organization needs to be committed to doing this if you do this as the supply chain organization alone that's not going going to work so the entire company has to um be part of it and has to understand what the benefits are why we're doing this and that this is long-term commitment but once you are in
• 08:30 - 09:00 this in this um environment and everybody is bought in it's actually a lot of fun because you see a lot of progress that's that's being made in a very short period of time so I mean Honeywell is known for their uh innovation in autonomy right um we talked a little bit about data we talked some about AI certainly supply chain um can benefit from autonomy what about that well look supply chain fundamentally is simple because you just balance supply and demand right but in reality is pretty complicated now um
• 09:00 - 09:30 eventually a supply chain will run autonomous because it's math at the end of the day it's just math and um it's very complicated math and it's um you have a lot of parameters and a lot of um factors you have to take into account but eventually it will be solved as a math problem and that's why it's so important for us to really think about how can we run a more autonomous operation and we are already on the on on a good trajectory to get there and if
• 09:30 - 10:00 you think about it how we um forecast things you know we need to anticipate things so those are all elements that play into an autonomous operation and if you think about a plant a factory you know to run an automated production line is some sort of an autonomy now if you Stitch this all together into one big autonomous operation this is where we all headed so I think about you know the the people out there maybe in school
• 10:00 - 10:30 right now pursuing degrees in finance or supply chain or digital it initiatives what would you say to them you know talk about kind of the opportunities here because it's pretty exciting yeah um I do think you know if you if you are a um if you are in this field already um the exciting piece is it's it's going to be one of the areas in in your in your life where where you will be part of
• 10:30 - 11:00 something that hasn't been done before that's I think that's pretty cool the other thing is it has so many different aspects you know it has you mentioned Finance but Finance in supply chain is tied to the hip it's you know because you make decisions that impact the financial of a company all day long but you have other aspects Logistics planning procurement um the piece I like most about supply chain is I get to touch almost every other aspect of the company I work very closely with our friends in sales
• 11:00 - 11:30 marketing um R&D you know this this is all because our decisions they all influence what what how these functions operate so it's really a supply chain of today is no longer really a where you have very narrow functional expertise but it's more a systems engineering a systems approach that you have to take and um I do think that's something that's that's unique that's new but this is what in particular younger um
• 11:30 - 12:00 employees and younger professionals actually like that they that it's not so narrow that they can do many different things and the the Futures what they make of it I love that of course you mentioned customer in in what you just spoke about as well and I think you know thinking of supply chain as a growth driver right can you give us a little more about that well look the the reason why we exist is because we act on behalf of a customer customer has a desire a
• 12:00 - 12:30 demand they needs something want something and we actually make it happen we create a product we deliver something we provide a service things like that so so if if we do a really good job the customer is happy it's good for the customer is good for us if you do a crappy job the opposite happens so that means um it's it's an absolutely foundational capability of a company to have a very high performing supply chain if we don't
• 12:30 - 13:00 um then a company will not cannot be successful and there are a multitude of examples in the industrial world and Retail where um a supply chain is actually the enabler of a successful business and um I do think the interest um over the last couple of years that you've seen that many people now have in supply chain comes from the fact that they all of a sudden understood oh if a supply chain doesn't really function really well then um something else is
• 13:00 - 13:30 not working and me as a it impacts me as a customer many people are wait were waiting for 12 months on a refrigerator and uh so so you people the broader organization now understands how important this is absolutely if if the last four years have done anything as definitely highlighted that um so we talked about the excitement of being at in the supply chain you know uh function at this this kind of point in history um when you back MH you were a young kid
• 13:30 - 14:00 what did you want to be when you grew up is is this what you intended or was there something else well I'm actually my background is chemical engineering so i' actually never studied really supply chain so I I I'm a chemical engineer and I and I when I developed my career I at some point got really interested in operations and I and I felt this was something I really wanted to do because it's I got to um touch a lot of different things I have to do I have to many things to do with people people so I I found this really interesting and
• 14:00 - 14:30 this is how I got into this and and you couldn't even study really Supply Chain management at that time you know we probably five programs in their world and now are 5,000 um but even before that I actually wanted to become a brew master a brew master that's right okay okay yeah nice so are you going to fulfill that dream at any point yes look I'm um once you have a passion for something it never leaves you and um the same happened to me so I'm I'm not a professional Brom Master but I'm somehow an amateurish brew master so I I build a
• 14:30 - 15:00 tiny little little Brewery in my garage and um so a couple of times a year there's Brew Day and uh so then that's what happens this is where the magic happens yes I love it thank you so much for joining us today no problem pleasure thank you thank you