Targeted tech investment
Hello, and welcome to this week’s edition of Straight Talk. Inside, we discuss:
The value of technology
Technology is pervasive in supply chain today. And those companies that are investing in techn have an advantage. Research from?The Hackett Group?found that “Digital World Class ” organizations operate at a 21% lower cost than their peers and have 32% less staff as a result—a potentially significant cost advantage. According to?Gartner research, top-performing supply chains are?investing in artificial intelligence and machine learning at twice the rate of their lower-performing peers . Those same firms are also able to leverage their size to utilize productivity as a focal point for sustaining business momentum over the next three years. Conversely, lower-performing companies are more likely to utilize efficiency or cost savings.
Certainly, there are many ways companies can stay ahead of their competition, and supply chain investment is only one aspect of that. But research and anecdotal evidence suggests investing in technology is a primary reasons companies move from being a good company to a great company. Technology optimizes operations and can increase revenue (or at least maximize margins), while people seem willing and able to perform at high levels for companies that share their values and invest in them.
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Growing a customer
However, the idea of adding technology without a strong plan in place is a recipe for disaster. According to a 2021 article by Blake Morgan on Forbes.com , 70% of digital transformations fail . To Dave Shrager, CEO of GAIN Systems, too many companies sell technology without ensuring the customer can benefit from it.
“The sales guys have always said, well, what is the problem you’re trying to solve and [they] try to take the technology and marry that,” he told me at the recent CSCMP EDGE conference. “Why can’t I just leave [that conversation] with what the problem you’re trying to solve is? How can we drive value with the technology? How can I do that one little thing with you—let’s go print some money from that, and let’s go take that money to fund the next one and the next one and the next one—that’s transformation.”
Shrager said his goal with GAINS is not to just sell technology, but rather build that relationship where the first technology deployment leads to something better. In other words, can you build that digital transformation brick by brick? “Incrementally, we think that’s a realistic world. And I don't know if you're seeing this, but we're seeing a lot of change fatigue in technology at the moment. And that change fatigue is a result of these huge commitments over long periods of time,” he said. “If we just fix small things and just get a little win, then do that again and again and again and again; all of a sudden I look up and I’m in pretty good shape.”
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Finding early value
Shrager, like some others, views success in increments. Does it benefit GAINS to sell technology? Absolutely. But he sees the process of selling technology as a small step that builds a bigger relationship that is providing long-term value to the customer.
“What I did is I started something I brought through to fruition quickly. I saw tangible value and value energizes value and creates more enthusiasm and creates momentum,” he said of adding technology in steps.
Shrager noted that some companies have existing technology that has “stagnated” and that leads to implementations that don’t go as smoothly or successfully. He said understanding limitations of current technology and future technology plays a role in whether expectations were met. “Maybe the goal going into it and the goal coming out of it was different based on the limitations,” he said.
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Deploying success, not growing sales
As with any company, Shrager is happy to sell more technology and drive his own company’s revenue. But, he said that’s not the goal GAINS is shooting for. “It’s not always helpful to sell you more,” he said. “And that’s the problem, because what are we motivated by? We’re a technology company. I’m motivated to sell you more, but I have a board and I have investment criteria here at GAINS that allows us to serve customers, meet them where they are [and with what they need].”
One takeaway from GAINS’ approach of building small is that it can grow solutions at a faster rate. Shrager said organizations of various sizes have similar problems. The goal is to develop solutions that can be scaled to meet the customer’s exact needs. That, he said, enables GAINS to stay true to its mission of customer service.
“I’m 52 years old and I finally get to go into the market and do what I feel is right and feel good about it every single day because all we’re focused on is the next ounce of value with the customer,” Shrager said. “And we’re not perfect. But when we’re not perfect, we do our best to overcome. And why do we do that? We have to because that’s the currency we use to grow the relationship. And I know that it’s all a little crazy, but it’s fun to be a little bit different.”
Robots, robots, everywhere
If it seems like everyone in manufacturing and warehousing is discussing robotics today, it’s because they probably are. A new report from the International Federation of Robotics found that the number of robots operating in factories around the world has increased 10% to 4.2 million units. Annual installations exceeded half a million units for the third consecutive year, the group said. By region, 70% of all newly deployed?robots ?2023 were installed in Asia, 17% in Europe and 10% in the Americas. “The new World Robotics statistics show an all-time high in the number of industrial robots?automating production?around the world,” says Marina Bill, IFR president. “The annual installation figure of 541,302 units in 2023 is the second highest in history. It is only 2% lower than the record of 552,946 units installed in 2022.” Read more here .
NextGen was a success thanks to you
I want to extend a big thank you to everyone—attendees, sponsors and exhibitors—that attended our 2024 NextGen Supply Chain conference last week in Chicago. I had a great time, and I hope everyone else did as well. The presentations were outstanding, and I heard many good things about our “small group” sessions this year. If you attended and want to let me know what you thought and especially, if there is any content/speakers you would like to see at next year’s event, reach out to me at [email protected] . The conference is only as good as the value you get from it, so we want to make it as strong as possible. Planning is already starting for the 2025 conference, so look for updates in the months to come. Once again, thank you one and all.
What I read this week
New rules and penalties are incentivizing supply chains to address cybersecurity . … With just under two weeks to go to the November election, supply chains need to be prepared for multiple scenarios. … Amazon is shutting down its Amazon Today same-day delivery service. … A new study said that 53% of home delivery orders either arrive late or to the wrong address. … The National Retail Federation is predicting a strong holiday season with retail sales continuing to grow. … U.S. bound container freight increased 13.4% in September, year-over-year and are now up 12.5% year-to-date.
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Thank you for reading,
Brian