Daniel: We hear about how supply chains are changing, transforming. But how does that actually happen and work? In order to discuss that, we’ve invited Mattia Aste, Global Manufacturing Excellence Lead at Monsanto which – as you know is integrating with bayer. He has a vast experience logistics in, planning, manufacturing, strategy in Europe, US and global roles. Given his end to end perspective, I’m very excited to hear how he sees supply chain transformation and what it takes, as a leader, to drive these changes.
Hi Mattia. Thanks for joining us today.
Mattia: Thanks for the opportunity of being here today.
Daniel: It’s a pleasure and yeah, as I said before very excited to have you here and discuss how supply chains are changing, why they’re changing and how you can actually lead that change. So, actually, first of all, just to put a bit of context, what do you understand by “supply chain transformation”?
Mattia: Interesting question. In reality Monsanto been transforming its supply chain for… I would say four to five years now and we have been doing quite some benchmarking out there in different industries and companies to see what that is really about. There is a quite an abuse or misuse of the terminology transformation. Sometimes, it’s really close to optimization but, in reality, there is a big difference. So optimization is a really transformational step change. It’s an initiative that is resetting your performance; maybe cost association or more importantly the performance toward facing your customer, I will say. I will say my learning, there are two or three characteristics that are very important. A transformation is always designed around your customer; starts there. It’s about performance and loyalizing your customer. The second thing you do if you have to work for your customer; you challenge your trade-off. Enough with the old way of saying that to produce more products, having a longer product mix creates the need of having more stock. Then again, to increase your performance in term of customer experience, you need to have more cost or more inventory. In reality, we have seen that the transformation is really the one that is helping you to transform multiple sets of KPIs at the same time, contrary to the institutional theory of supply chain.
My last learning I will say that a transformation is a transformation as such, only if it’s really touching the full operating model, so you really take care of process, system and people at the same time. I think it’s no longer the time in which you can think. You know in the past, we used to say a good IT system makes a good process?
Mattia: That is not true and furthermore, any good system needs a very good adoption from people and a very robust change management.
Daniel: Later I’ll ask you how do you influence or get people on board with that… but actually, why do you think it’s necessary to make this transformation to make this change in the supply chain?
Mattia: Yeah, there are two questions that are arising. I would say one, “why” is definitely the most important but also “when. I would like to turn the question a different way. Can you really afford not to transform nowadays? The reason can be different: survival, growth… but if you think about very volatile macroeconomics, competitive environments have changed dramatically but also societal requests: sustainability, corporate responsibility…
In a world in which the customer experience is nowadays much more important than the product you sell, really, it’s about the experience. There is no place to hide, so you need to be transparent, agile, dynamic… So I really think it’s very difficult nowadays to be in a situation in which you can sit on your supply chain and not do anything.
Furthermore, I think the philosophy has changed. We have seen in the past a lot of regard to a supply chain in term of supply chain being just an enabler. Nowadays, the supply chain is a competitive advantage. If you look at the top 25 of Gartner, all those companies have been in supply chain transformation for more than two decades and they renew continuously their vision of competitive supply chain. I was mentioning also when, in reality, one big learning is that you need to transform when you’re still winning. You need to have to be a compelling vision of change and really go for it because in reality, if you try to transform when you are trailing behind, that’s a problem; it’s very painful and rarely successful. You run how to fuel very soon if you really try to solve a problem. So build a vision and go hard at it.
Daniel: And what is the main element of this; of a `modern supply chain’?
Mattia: I would say four to five in my experience. Again, customer focused. Do we really know our customer, what they want? It’s such a basic question but sometimes there is a misunderstandings in companies about what really the customer wants.
If you want to serve your customer, well then, your supply chain has to be integrated and collaborative. There is nothing as a silo approach to producing wastage in a company, and specially in the supply chain. By integrated, I mean; anyone can refer to the situation in which you optimize just a step of the process instead of looking at the end to end. What does it take to serve your demand? So integrated and, as much as it is very simple, the same collaborative; really collaboration between people makes a difference.
Okay, can you be… can you avoid being digitalized and data-driven? Possibly no, so digitalization is important. I think there is some misunderstanding around that. It’s hard work to be digitalized; it’s not really about throwing a couple of apps there. The good thing is nowadays, there is a spectrum of solutions. No, you don’t necessarily have to go into AI straightaway. There are different levels of evolution of your digitalization. My learning is that you need to start… you need to use those data, not only collect them. You need to have an actionable insights and a big turning point is when you go from prescriptive to predictive; you start understanding what is the scenario that may propose themselves. Other two conditions of being a modern supply chain in my mind is resiliency. You need to be resilient, you need to be able to react to adverse economic situation or a problem with marketing or demand or many other condition and that comes with a third focus on continuous improvement.
There is one final component that I should have mentioned at first because this is the first and foremost. My learning is that as much technology you want to implement in your modern supply chain, supply chain is always a matter of people. It has to be people-centered because the engagement and the and the qualification of your people definitely deliver a completely different customer experience.
Daniel: And you mention people, you also mentioned before that the best moment to change the supply chain, to transform it, is when the business is actually doing well which may sound counterintuitive. How do you get people, colleagues of all levels and all functions on board with supporting and financing and compromising as well on transforming the supply chain?
Mattia: I’m not sure if it’s a secret or just as an indoor motive approach or not even a surprise, but indeed is about leading and managing change. As a data point, in the recent transformation that Monsanto underwent over the last… as we mentioned before, four to five years, I would say that more than 35% of the spending was connected to change management. Well, there are a few things you need to do well. I think we started to go as deep as changing the culture of the of the function. You need to start by inversing on the pyramid. So leadership is there to enable the success of the organization, not the other way around, and that has been for us, a very big change in culture. Getting out of the command and control way of managing your supply chain and tapping into what we call a collective intelligence of our organization. That means then you will lead by example. So leadership starts a transformation but not necessarily will make it successful, so you need to be a role model. You need to be… we call it vocal advocacy, but also, you really need to embody the transformation.
One thing we did was not necessarily easy is that you drive by a value, so there is no way of imposing a transformation. You need to attract people by showing value and value can be different in ways; that can be cost, can be reliability, can be visibility, can be customer experience. Again finally, what we learn is very important; you need to make it personal. There is a moment you may need to find for almost everyone in your organization; “what is in it for me” for all those people that will contribute to your transformation. So again, pretty basic but I will say, you put your people at the center, you listen to your customer and you do your proper due diligence in terms of change management and a transformation will be much less scary than you would expect it.
Daniel: I’m sure it sounds much easier than it actually is, right?
Mattia: It is, there are ups and downs indeed but again we go back to your role as a leader to lead by example. You never deny that it’s difficult and you will say it loudly, “it’s difficult”. There is blood and tears involved in it but again, you keep your vision in mind, you make it compelling enough for the people to follow you and you will get great satisfactions out of it.
Daniel: Oh well, that’s a great way to end it, Mattia. Thanks so much for your time and for participating on the podcast.
Mattia: Thank you very much
Daniel: And thanks to our listeners as well and see you in the next edition of the Career success podcast. Have a great day.