Logan Ensign: 1:42
Well, Alexis, really great to have you here, excited for the topic today, and I think you've got a really unique background to help color and give us commentary on all things planning. So, to get us started, we'd just love to hear from you a little bit more about your background and how you've got where you've gotten.
Alexis Lozada: 2:02
Well, first of all, thank you both, Joel, Logan, for the opportunity to come together here and be able to talk about our experiences. So, in terms of my background, I've been in the supply chain space for about almost, I will say, 20 years in various roles, but I was mainly focused on supply chain strategy, mainly focused on supply chain strategy basically look at every single opportunity to drive continuous improvements of the amount of supply chain, internally and externally as well. But then I moved into the world of innovation where I worked with SAP on their new cloud-based supply chain planning solution, mainly focused on inventory planning, but all along, that's a space where actually the consumer packaged goods industry. It's pivotal to them. I'm passionate about supply chain but, surprisingly for many, I actually have a background in finance. That was the start of my career. I'm an economist by training, so I did spend quite a lot of investments in that space. So bring it together.
Joel Beal: 3:05
The world of finance and operations has been actually a very rewarding experience for me professionally Excited to have you on, alexis, I did not know you are also a recovering economist.
Alexis Lozada: 3:17
I am a recovering economist. I wanted to work for a central bank right out of college. Yeah, I could tell you more about that, but that didn't happen.
Joel Beal: 3:27
So how do you go from economics thinking you're going to work at a central bank to supply chain at Del Monte Foods?
Alexis Lozada: 3:36
Well, to make a long story short, I basically migrated. I spent my entire career in corporate finance. I ended up going to graduate school in Venezuela, got a master's degree in finance and I worked for my last job. That was in investment banking. But then I moved to the United States and I decided to reinvent my career. I went back to graduate school.
Alexis Lozada: 4:00
That's when I went to Carnegie Mellon and then I turned into supply chain by accident. I actually was a contracted consultant by Del Monte to do a back of the envelope network optimization for factory direct shipment for their, I think, vegetable production lines and so forth. But at any rate, that's how I got into supply chain, because after my contract with you, I talked to the VP of supply chain at the time he offered me the job. It was a phone call where I said, well, we have this problem. And I say, hey, look, that's a network optimization based on transportation costs. That's me the economist thinking, with a lot of the data science classes that I took at Carnegie Mellon, and I said, hey, guys, I think I can help you with that.
Joel Beal: 4:47
Let's start talking a little bit about planning. So you're at Del Monte. It sounds like you did a lot of different things in supply chain. I'm curious what are the big trends you see right now?
Alexis Lozada: 4:54
So I think the trends that I'm seeing is the planner of the future will require more quantitative and communicational skill sets, more centralized planning processes, right Leveraged by technology, and I think technology is also, in a way, it's going to support that, but it's creating a trend set towards that Planning for supply chain to be specifically, which I think is what we're talking about. The best supply chains of the future are going to be network aware. They're going to be end-to-end network aware. More than ever, planners have to look at networks within supply chains and be able to drive benefits out of it. So think about that for a moment.
Alexis Lozada: 5:40
When we talk about networks, we're talking about the connection of distribution of finished goods to customers, manufacturing processes or assembly processes connected to those distribution networks, raw material sourcing connected to those manufacturing processing networks, and then the vendor sourcing right, which is another network by itself. All of that is the network right, and, of course, one individual won't be able to manage that overall that's impossible, right, but it's a team. But it's a team that requires then have a network view. That will be the ideal. What do I say is the ideal? Because that's the type of arrangement in terms of the kind of skill sets for the planners, the type of processes defined, the type of teams that are built together in order to really take full advantage of the technologies that exist today. They're not being developed, they're here and they're just being improved upon, but they're already here. I just don't think that processes teams are not there yet.
Joel Beal: 6:44
Processes teams are not there yet. So just to recap, you're saying this network-based approach and the technology is there. It's just more a function of the people and the processes to take advantage of all the technology that's been developed, because, as you said, these aren't new concepts. I mean, these have been talked about for a while.
Alexis Lozada: 7:03
No, and so the trend now is to how to facilitate that process right. Ai could play a role there, I think, change management and leadership vision, because to me, is the vision right? If the supply chain leadership shares those values and that vision, it's capable of driving. You know, people changes, process changes, right it's capable of driving people.
Logan Ensign: 7:25
Changes process, changes right. So, alexis is sort of the obstacles you see in this transformation or optimal sort of planning process more around organizational behavior than is what you see.
Alexis Lozada: 7:38
So if you think about change the spark of change comes from leadership has to have that view that a supply chain, in order to really drive value and remove inefficiencies, lower costs, increased productivity, that needs to be viewed from the entirety of the chain. You cannot just take one value here and call it a win when you're actually passing that upstream. A procurement guy cannot say, well, I just saved the company a million dollars when I'm just building inventory like a madman. So that's the traditional case. So it has to come from that leadership. The second aspect of this is the leadership doesn't necessarily have to come from the executive line or the executive management of the company. It also says about the culture of that company A company that fosters innovation, that fosters communication, that fosters people's ability to communicate open, even a manager or even a supervisor, in a cultural environment that ideas are heard of, are consumed, are processed, are taken into account and are actually put in place. That's the type of also of change that is required right?
Logan Ensign: 8:58
Let's assume you've got organizations that want to improve, that want to embrace change, but you have competing priorities From your vantage. Why invest in improving your planning process?
Alexis Lozada: 9:10
There are companies that have really good planning processes, very solid. What I think is lacking is the ability to run scenarios that can help you understand the range of your potential opportunities, your upsides and your downsides. The ability to understand what are the elements that really drive my supply chain, which ones are the drivers that are really sensitive to my supply chain in terms of their performance, in terms of impact and service levels, inventory levels, on-time deliveries and so forth. Even manufacturing capabilities on time deliveries and so forth even manufacturing capabilities but the escenario capabilities is one that is key to planning. To answer your question, logan, that to me has been a huge discovery with a lot of customers in the latest years is to say, oh, wow, I can run a lead time scenario, I can run a inventory holding cost rate scenario, I can run scenarios on changes in variability of demand. Oh my God, lot sizes scenarios I can do so.
Alexis Lozada: 10:13
That is not in the mindset. It's not as flexible. Planning is not as flexible as people may think. The technologies are there, like I said, but it's that the scenario is. Is that can help you make that decision the right decision, not just to say, well, it's deterministic, right and I'm all a month to month, I'm making deterministic decisions. It's not deterministic and if you want to prepare your your supply chain into the future, it's really more probabilistic, right.
Joel Beal: 10:43
And so Are you saying it makes a lot of sense about, yes, anything forecasting wise, it's probabilistic, right, and showing those ranges. I mean I guess you have to forecast to some plan, but it's good to understand confidence levels in those plans. But let's talk a little bit about the scenario planning that you're mentioning. What is keeping companies from doing that more?
Alexis Lozada: 11:05
Maybe let's go a little deeper on the skill set requirements that I referred to earlier. The first one is communication Be able to effectively communicate with an audience, because a planner has to persuade an influence, she or he has to defend their decision. That requires communication, that requires even negotiation skills, influencing people. So that's number one. Number two you refer to, joel quantitative. You don't have to be a data scientist, right? But you have to have some basic mathematical skills. If you have some basic background in statistics, that can help you there. Including the mathematics is also the ability to understand business models.
Alexis Lozada: 11:55
Business financial valuation I also think it's very important. That's how I got in. To build business cases requires doing calculations of potential reduction of inventory or maybe margin. It's a little bit of an advanced topic, but having some financial analysis background will be very, very helpful. The third one is technology, and I'm going to touch the scenario part of it, right.
Alexis Lozada: 12:17
If you think about communication, quantitative skills, which in a way is also analytical skills, if you have those two, then you start thinking about the what if? What if this doesn't work? What if this doesn't work? What if this doesn't work? That is the moment when technology can help you to run in scenarios, but a scenario is as relevant as the person who conceives it in terms of understanding that this is a scenario that is valid. It's not a scenario for running in scenarios. I work with junior people that come with 20 scenarios and then, okay, which one is the most relevant one, right? Well, a planner who knows his or her supply chain, knows how it works, knows the variables that works there, is going to ask the right questions.
Logan Ensign: 13:06
I'm reminded of a conversation I had with a supply chain at a publicly traded company. This was early in time here at Alloy. A lot of our perspective is you should be bringing the true demand signal into planning processes. I was talking to this gentleman and we think about it very much from like, hey, let's generate a forecast, that's the best number, right? He paused me in the middle of our conversation. He said Logan, you're not getting it. Planning is a negotiation as much as it is a math exercise, and so as you talked, it kind of reminded me of this that you're kind of looking for someone who isn't purely quantitative, analytical, because there is sort of coalition building and negotiation and conversation happening as well.
Joel Beal: 13:48
So we obviously work and focus on consumer products. What are you seeing in terms of changes in that space?
Alexis Lozada: 13:55
The biggest challenge right now is that for some companies, especially the traditional CPGs, they struggle with brands that their value, in my mind, have kind of gone down over time because consumer preferences have changed, the sales channels have changed For traditionally branded consumer goods, brands that we know, your parents knew, especially here in the US. Your parents knew, your grandparents knew, If you think about it, if you think about it, some brands for your grandparents that was, that was the, those were the iPhones of the time, right, and so that brand image of a green bean Del Monte can for Thanksgiving, I mean that is that is like buying the latest iPhone, mindset, right. So that brand had a value and it has had a value over 100 years, right, but 100 years have gone by and so now our generation, even the younger generation than us, they don't see it that way because it's not innovation, it's just vegetable deliver in a can. The fact that people are buying online more than going to a supermarket, the fact that now there are grocery stores that are not mainly selling name brands anymore, you see that the growth of Trader Joe's, Aldi's, many other outlets that are not your traditional grocery store anymore, that has had an impact in deprecating the value of those brands. I'm not saying that those brands don't have value anymore, but they're struggling, right, they're struggling. So now that premium price that used to be there, it's being challenged and that's why you see the growth of private label, right and so private label.
Alexis Lozada: 15:53
At the time when I worked for Pafante, it was like the biggest enemy, but the biggest enemy, eventually you join the biggest enemy, because that's another trend.
Alexis Lozada: 16:03
You see that more and more of those CPG companies are also in the business of private label. I mean, they sell some local brand of I don't know green beans that was probably manufactured by the Monte right or the competition, maybe ketchup, you know, there's a private level, maybe it's manufactured by Kraft. So that, to me, brings another challenge which is and that's a challenge of today and the future for these companies. Another challenge which is, and that's a challenge of today and the future for these companies, is it's no longer about the benefits that you draw from your brands, but it's the efficiency in which you manage your business. You manage your supply chain. So supply chains have to be better managed. Their priorities have to focus on how do I improve the efficiencies while protecting my service levels, Because now more than ever. You have to build customer loyalty by a good supply chain execution which is filling your orders in full and on time, right, it's such a competitive space and it's fascinating.
Joel Beal: 17:03
As you were talking and you mentioned can of green beans Del Monte green beans being like the iPhone at the time, I've never thought of it this way. I mean, most of my grandparents grew up in farms. I mean they probably went and bought their beans from the farmer next door, if they didn't make them themselves, and it probably was this marvel of technology that I can go and buy beans in a can.
Alexis Lozada: 17:27
And not only that, but then also in countries like the US where you have winters right, you bought your green beans during season harvest season. The can allowed you to eat it all year long, right and so that is innovation.
Joel Beal: 17:41
It's innovative. You can really charge a premium. You build a brand around that and then, decades later, it's like beans in a can Anybody can do beans in a can.
Joel Beal: 17:51
Anybody can do beans in a can right and then it switches to if you innovate, you can, you know, maybe you can ride that brand name for a while, but eventually it becomes stale, comes stale, and so either you have to have new product innovation, which obviously all these consumer brands are competing on, or you innovate with just more efficiency, better supply chains, and saying we are just going to be a more operationally efficient business and we can sell at a lower cost to competitors.
Alexis Lozada: 18:16
There was an underlying topic in the CPG world that we can talk about. It's about traceability and visibility to the end consumer. For a while there was that trend that you know I want to see where the beans come from and how they were treated and how they go through the whole channel. There is some of that happening, still happening more on the topic of sustainability Not really that relevant in the world of planning, to be honest, except that maybe you need to plan for different sources of your raw materials.
Logan Ensign: 18:47
But other than that I mean that's another trend that I know CPG suffered through- right, yeah, it's fascinating this notion that supply chain is becoming more front and center as a sales pitch and a differentiator, right, I'm reminded of a conversation just a few weeks ago with someone in supply chain who had said it's wild, logan. I am now part of line reviews and this last line review I was in the first 20 minutes and so we've seen in that wholesale to kind of supplier relationship just a lot more emphasis on supply chain and that being really, yeah, that key differentiator in some of the segments we work with.
Joel Beal: 19:26
Hey, Logan, do elaborate there. What is that about? Is that about the service level side? Is it around visibility in the supply chain, Because that's a selling point for your product If it's sourced from farmers in Peru, for example? You?
Logan Ensign: 19:40
know. I think there's something to that. In this instance, it was more about skew consolidation, I think, a little more related to the white label conversation and suppliers not needing or sorry, wholesalers not needing to work with a whole'm going to pick the person to work with who has a well-run supply chain, high fill rates, because that's going to be meaningful for me, and so, as I look to consolidate, it's important for me to work with the partner.
Alexis Lozada: 20:15
So that's a fascinating topic too, because it's about supplier-manufacturer or supplier-distributor relationships. Good relationships are established not because we met at a golf club, but because your supply chain executes really, really well, and for me to thrive, I need somebody like you executing at that level. I have seen some customers where they're planning. Believe it or not, their planning was really, really centered around vendor performance. So who will source faster and more reliably? And that will be my vendor right? Because what happened to them is that they were holding so much inventory in their supply chain because every single vendor they had took forever unreliable, incomplete order fields and so forth.
Alexis Lozada: 21:06
More than ever here in the United States, with the CPG industry, that's exactly what a Walmart, what a Target, what a Kroger. You know, the largest retailers, but even the bit size or even smaller, are demanding of the manufacturers is to say be efficient, be on time, because then I'll buy more from you. I will give you preference over the competition Because remember, at the end retailers have to make a space decision right. Every store is a retail space grind. So I want to put you here. I'm going to sell more of you because I know I can get that from you right, I can always keep it filled during Thanksgiving, during promotions, during holidays. What have you?
Joel Beal: 21:51
I'm wondering as I think about brands and the evolution in retail. I don't think this is anything super new, but if you're the larger brands, it's all about driving efficiency, because for the most part, they's all about driving efficiency, because for the most part, they're not amazing at product innovation. And then you've got all these small, newer brands that I think differentiate in part, sometimes based on how they're sourcing right. They're building a brand around hey, we're this new organic product, or we have a sustainable supply chain, or this is a healthier option. That's really where a lot of the innovation is, and obviously then the big companies try to buy them up. We see this happen all the time with our own customers.
Joel Beal: 22:31
They're constantly getting purchased by the big conglomerates. They bring them in and they probably run. You know they're figuring out their supply chains, let's put it that way. That's another trend too.
Alexis Lozada: 22:41
That innovation is not coming from inside the companies, it's being bought right. There are other industries that traditionally do that to grow. That's happening in CPG, because that's where it's. When you have industries with easy entry, yeah, you'll see a lot of that phenomenon there. We only have a couple of minutes left.
Joel Beal: 23:00
We'd like to ask this, everybody's favorite topic. Let's talk about AI. Is it hype? Is it real? You obviously work with a lot of companies at Westernacher. What are you seeing For?
Alexis Lozada: 23:12
me, it starts with the use case. Right, it starts with the application auth. I cannot say that there is a particular use case that is relevant. Right, there is a lot of talk. I see a lot of opportunities in terms of potentially identifying use cases, so I think we are in the face of identifying what those use cases are. I also think that we need to be very careful to claim that AI is going to solve all your problems in supply chain. Believe me, If we go back to what we talked about earlier now, technology and again AI will stay within the bounds of technology. Again, supply chain starts with process, people and the technology that makes you manage the supply chain better.
Logan Ensign: 23:53
Alexis, what I'm hearing it's a little like Hitchhiker's Guide to the Galaxy that we have the answer of 42, and now we got to go figure out the question in supply chain.
Alexis Lozada: 24:03
Yeah, and the thing is, if you want to adopt AI, it's like adopting a new technology. How is this going to help me? How am I going to work with this every day? The human interaction aspect is important and so far, the human interaction that I've seen is search, what we've been doing for the last 10 years, since the Google search application came around. We're just texting and find, okay, let me find this, Let me find this. But you could give a planner a chat box and say ask for things. But okay, and then what right? Technology is as useful as you know what matters to you. So when you come to that interaction, what's the value? Right, and where do I start? I cannot come every day with a blank slate and say so. It has to be purpose-driven. It has to be designed with a purpose for the planner, for the supply chain analyst.
Logan Ensign: 24:59
Well, very insightful there, Alexis. We're actually at time, so appreciate all the insight. Covered some really interesting topics. No, thank you.
Alexis Lozada: 25:06
Appreciate this. I love this. Any other topic you want to talk in the future, I'll be happy to come back. I know I've done a lot of the talking today, but I don't ask questions, as you probably ask more questions.
Joel Beal: 25:21
We are here to ask questions of you. People get to hear plenty from us, that's great, we'll do a reverse.
Alexis Lozada: 25:27
Maybe I'll look smarter if I ask the questions. Oh, you figured out our trick there, alexa.
Logan Ensign: 25:34
Yeah, you've been listening to Alexis Lozada, associate Principal for Supply Chain Planning at Westernacher Consulting. That's all for this week. See you next time on Shelf Life.