Many ERP vendors are focusing on manufacturing sustainability as organizations become more conscious of not only saying they’re using sustainable resources but also proving it. In this podcast, we interview Colin Elkins, Vice President of Manufacturing Industries at IFS, to learn how organizations can get on board and meet requirements before possible legislation.
Read about some of the most interesting points from the podcast here: https://hubs.la/H0K4TYm0
Many ERP vendors are focusing on manufacturing sustainability as organizations become more conscious of not only saying they’re using sustainable resources but also proving it. In this podcast, we interview Colin Elkins, Vice President of Manufacturing Industries at IFS, to learn how organizations can get on board and meet requirements before possible legislation.
Read about some of the most interesting points from the podcast here: https://hubs.la/H0K4TYm0
Hello,
Speaker 2:Thank you for joining us today on this edition of the Panorama angle. I'm joined today by Colin Elkins, with ifs and Chris Duvall with panoramic consulting group.
Speaker 1:Colin,
Speaker 2:Chris, thank you for joining us today. Thank you, Sam. Glad to be here. Yeah. Thanks you sir. It's it's really good to have this opportunity. Colin, can you tell us a little bit about yourself and what you do at ifs? Okay, so I'm the global, uh, well, I'm the vice president of industries manufacturing specifically. So I have a little bit of an input into the product strategy input into marketing, a little bit of an input into the whole of the organization, looking at the future trends, the way we're going with the product. And also what's sort of happening out in the marketplace where we can, we can steer the design and the marketing of the product. Uh, I've been in industry all my life. I spent, uh, about 19 years in manufacturing, heavy engineering and the last three years at ifs. And prior to that, I spent 25 years as a presales consultant. I just got fed up with driving. All right. Needless to say, you have a, you have a little bit of experience under your belt, just a little bit. And sustainability just happens to be something I'm a little bit passionate about as well. That doesn't mean I'm an eco warrior, but it just means I've got a little bit of, uh, care for, for war manufacturers are doing and making sure they don't get lost. Perfect. I think you're going to be a, definitely a, one of the right fits for our topic today. And Chris, would you mind introducing yourself? I think this is the first time we've actually had you on a podcast. Uh, so go ahead and introduce yourself real quick as Brad, Samuel. Thank you. And my name is crystal Balton. I'm director of industry relations here at Panorama consulting group. And my role responsibility is to stay up to date on all the products from all the major ERP vendors, uh, and solution providers such as ifs, and then keeping track of where they've been and where they're going in the future. What type of technology using and what really, what are their differentiators, uh, making sure we understand what industries they, they play well in, uh, as well. All right. Thank you so much, Chris. Now, uh, Colin, there is definitely a reason we had you today with your background. Um, our topic that we want to discuss is going to be economic sustainability in manufacturing. Um, so can you tell us a little bit about what that is and, and, um, how it's used in the ERP industry? I think it's one of those topics that suddenly has become right to the forefront of, of, of manufacturing today. You know, whether it was COVID that's caused an acceleration or whether we were always doing it. I think, you know, within the ERP space, one of the things we're recognizing is there's legislation coming in. There's a responsibility now to customers and consumers in terms of proving sustainability. And I use that word very carefully because I think in the past, sustainability has been something that manufacturers have paid lip service to, they put it on their websites, they put it in their board papers, but, but now, you know, customers, consumers are starting to demand to see where the actual sustainability is coming from. So I think ERP has a great place to play because it touches most of the points of customers, suppliers, manufacturers, and it's that data. And it's only that data that will be available to prove the sustainability going forward.
Speaker 3:Okay. Now, when you say sustainability, um, from, from my angle, right, uh, and growing up as a kid, they're like, if you cut down a tree, you plant two, is it the same thing or is it completely different?
Speaker 2:It's partly that, um, you know, I think, you know, it's not about being an eco warrior and cutting down trees. If you think of, of having a sustainable business, it's about making sure that your supply of raw materials are sustainable, that you can sustain their supply and you can sustain your market place with your, with your customers. And I think we've also the look that we've got a generation coming up now that we're the millennials that are now in positions of authority that are actually starting to take a real look at the sorts of companies. I mean, there's lots of bits, there's so many interesting stats about this and things like that. 75% of millennials say they're actually willing to pay extra for sustainable products. You know, so things like labeling coming out of ERP systems, all those sorts of things are becoming more and more important as they are. It's about proof now, not just ticking a box on a website
Speaker 3:Is sustainability. Is that not just the raw materials, but you, you mentioned labeling was that what's printed on the labels or the labels themselves.
Speaker 2:Yeah. It's things like that. I mean, just as an example, I mean, it's sustainability covers a lots of areas because it also covers things like traceability and authenticity. It's really about proving what you're doing is good for your customers, good for your suppliers, but also good for the planet, you know, and, and let's face it, you know, there is, there are issues with the planet. We've seen it with COVID, you know, we stopped driving our cars for how long, you know, a few months, you know, we had a 50% reduction, nitrogen dioxide across every major capital in the world. You know, we had a situation where in Northern India for the first time, in 25 years, they could actually see the Himalayas. So we actually started realizing what manufacturers and people are generally doing to, to the world in the way they make things, you know, and it can be as little as, you know, if you have a sustainable methodology in the way you manufacture, it makes you look at things like almost like the, you know, it makes you look at the processes you're doing and sort of tick boxes to say, well, yeah, I mean, are we using our power economically? Yeah. Are we making products that can be recycled? Are we making the best of the materials we're getting? Can we prove that what we're doing will create sustainable future? Not only for our business, but also as I say for the planet.
Speaker 3:Yeah. I think I read something that, um, for the first time, and, and I don't know how many years there were dolphins and the rivers in Italy. Do you remember seeing that
Speaker 2:It was the Venice canals? It was like, I'm not sure it was dolphins. I know it was early fish. Um, cause we're going to see in the photographs, but, uh, that's quite an interesting one cause that wasn't necessarily due to, um, pollution. That was more due to the fact that with less traffic going up and down the canals, they weren't stirring up the, the modern, the sediment, et cetera. But, but again, all of that modern sediment, you know, when the fuel oils and everything getting into the water, suddenly they became clear and people could see these fish and jellyfish floating around.
Speaker 3:So would you say that, uh, you know, I mean, this has been something that has been kind of on the, on the horizon and potentially COVID kind of push that along and made it more in the forefront of, of manufacturing.
Speaker 2:Yeah, I think as I said, you know, we, we had little elements of legislation in the past. You know, we had volatile organic compounds coming out of coatings, like paints, et cetera, things like that. That was legislative. Um, it's very difficult to legislate legislate against sustainability cause it's very difficult to define it. And we had the round table for supplier Palm or sustainable Palm oil, you know, and that became something that manufacturers of food products wanted their supplies to prove that they were sustainable. We have customers in the retailers in the UK that we will not trade with somebody if they cannot prove that they're far more is coming from a sustainable source. And I think covert kind of tipped us over into actually believing that we could do something. I think, you know, it's like saying, well, you know, if we do, if you stop doing all of this, then the air will get better. Pollution will go down and it'll all be wonderful. And we all thought, well, yeah, really. And I kind of think that that's an element, there's an element of truth there. And then suddenly when it actually happened and as I said, you know, people in the Northern part of India saw the Himalayas. Can you just imagine that for the first time in 25 years where there was no that's, that's amazing. I wish I could have seen that myself, but you have to get a child waking up and just suddenly seeing something they've not seen for 25 years.
Speaker 3:So with this, I mean, are there some industries that are, that are taking it more seriously than others? I mean, I know that there's been, of course for decades, there's been a lot of focus on the natural gas and oil industries and, and the paper industries, but where else is this actually going in manufacturing?
Speaker 2:Yeah, I think it's, it's down to it's the scale, you know, the companies you listed there are possibly potentially the biggest polluters. Uh, interestingly enough, they asked some of the biggest investors in sustainable energy, uh, supporting, uh, third world countries in terms of economies, et cetera. So whilst they may be big in that part, they're also good in other parts, but I think it's this whole issue that manufacturers today are starting to see that sustainability is something that's good for the balance sheet. It's good for getting costs down. I mean, if we talk about, we just talk about things, something like investments, you know, manufacturing company, like no other, yeah, you need investment. But if you look at sort of investments today, you've got the situation where you've got these ESGs, these economical social governance, you know, 48% in 2017 investments in funds. This is millennials investing has now jumped to 75%. So people are investing in these funds and these funds are made with companies that are demonstrating their sustainable. So it is it's. It is, you know, from a, from a manufacturer point of view, as I said, it's looking at costs, it's, it's looking at public appeal, it's looking at shareholder value. It drives innovation as well because one of the things having a sustainable approach to life means that you start challenging how you manufacture a product, you know, sustainability, isn't just about not cutting down trees. It's the fact that when you've sent out a pump, when that pump comes back, 90% of it, 95%, a hundred, maybe a hundred percent of it can be repaired, replaced, or recycled. And that's really, really important. One of the things that ifs has been doing is we, we are well known in the marketplace, not only for ELP, but also service. And we're starting to bring those two elements together, such that we've got that whole circular economy model built into our product set so that we can track where products are going out, where they're being used, where they're coming back, where they're being receptive, just to eliminate that sort of waste. And there was another interesting, you know, just going back on the HR side, you know, personnel point of view, there was a study done in a, in a series of university. Actually it was in, in the United States where they pitched three companies to work for. And one of those particular companies in their pack that they gave them was demonstrating our sustainability more sustainability then and others salaries, they were actually showing was slightly less for that particular company. 94% of the students wanted to go and work for that company, likely want to go and work for Google, likely want to go and work for all these companies that are out there demonstrating this. And I, and I kind of see, this is just, it's, it's a bit of like a ball that's getting bigger and bigger, more and more traction. And the big manufacturers out there are really taking it serious. And there are lots of examples. I mean, I've got my, my favorite
Speaker 3:One is in the UK.
Speaker 4:I doubt if you've got it in, in the U S if this is going to be us, but if you think about a car manufacturer, this new cost, so let's say it's a fit 500. So it's a small car it's target market is the younger generation. You know, you're going to put an advert on prime time television, it's going to cost you thousands and thousands and thousands of dollars. Do you know what that road is? That rambling line is the fact that the seats are made from a hundred percent ocean recovered plastic,
Speaker 3:The 16 year old that, uh, he, he created, uh, a, uh, an ocean skimming machine and it gets the plastic out. I'm, I'm assuming he's doing business with them,
Speaker 4:But the leading marketing strategy, you know, I do agree with you calling a very interesting situation and, and you know, it is good for the bottom line of these companies. I think eventually when they recognize it, you know, I think about how technology supports sustainability, um, and you think about processes, right? You want repeatable processes. You want scalable processes and companies are certainly trying to standardize more often, uh, you know, trying to take advantage of best practices. So they don't necessarily have to have heavy configuration or heavy customization, uh, of application. So when I think about sustainability and technology, I certainly think, uh, those processes, uh, that can be in play where they can, uh, be put to use across the globe. I also think they're, you know, the technology supporting clients, uh, around, sorry, compliance. Um, and now I think what you're seeing with that standardization is, is organizations are, uh, going above and beyond of what they need to, uh, how, how they need to be compliant in some areas because they need that level of compliance in a different region. So why not do that same and why not repeat that same kind of deployment, uh, and, and you are improving, uh, the overall sustainability of that organization as well. Um, so yeah, certainly affects the bottom line and they are, um, uh, technology is unique in the way it's imports, uh, this sustainability aspect. Yeah. I totally agree with you
Speaker 3:When, when, uh, now I know you, you sit in on a lot of, uh, different vendor demos and, and you deal with a lot of clients, um, over the past decade, have you seen this trend? I'm actually moving in this, in this direction, as far as the development of the technology to support the sustainability. And how has that, how has that changed that you've noticed?
Speaker 4:Yeah, I think it's, you know, 10 years ago, um, ERP systems, um, were labeled maybe labeled as pure manufacturing or just for supply chain and they weren't very focused or, um, a large, uh, you know, they, they, weren't very accomplished in the back end for the accounting and maybe the CRMs, uh, over time we have certainly seen, uh, you know, combination of technologies, uh, and as companies rewrote things into the cloud, um, you know, that, that, that code and that software, uh, that they're now deploying, um, is a lot more bullet proof proof if you, if you will. So it's protected, you know, against kind of future disruption of technologies. It's built around, uh, you know, new technologies that are going to be more sustainable. Um, Colin had mentioned the, you know, the fact that younger generations are coming up and groups really need to attract, uh, these younger generations, uh, and these younger generations are certainly changing the focus, uh, and the way that these, uh, large ERP and cloud solution companies do business. They're not really changing the core, but they are pivoting on how things are messaged and where things are going, I think with, um, you know, um, a larger set of ethics behind it.
Speaker 2:Alright, now, collard, you mentioned that there was going to be, or there's potential, um, legislation, and, and I think Chris kind of alluded that it's, it's kind of pushing in that direction and you, I would think it would be kind of hard to enforce that kind of legislation, unless it's very, very specific, but how do you see that playing out? Or is it playing out? Yeah, I think you're absolutely right. To be honest with you, Sammy. I mean, it it's, I don't think it's actually possible to legislate globally or on a macro level. It is always going to be at a micro level. So if we take the round table for the sustainability of Palm oil, there are some rules and regulations in how that works. And that's fine. If you look at the volatile organic compounds or look at even Walmart, now, Walmart are putting sustainability indexes against all their products. Now it's not a rocket scientist to work out that in future, they're doing that so that they can look at every single one of their suppliers so that they can cut down their global index and use that as a competitive advantage against other people. So as a manufacturer, you have to recognize that the big players out there, the retailers, as well as large manufacturing companies, um, whether that's discrete manufacturing or processing manual process manufacturing are going to be demanding to see how you can prove that sustainability. And by, as Chris said, the only place you can get, and those technology is all going to come from data. You know, it's not good enough now to say, well, we ordered so much of this and we sold so much of that. So that it's going to be a proper net balance, um, you know, ERP systems and technology, you know, whether they're deployed in the cloud or whatever is going to be able to source that data and that level of sustainability, but I don't think you'll ever legislate against it. We had a, uh, recently we've been doing some great marketing this, we had a whole minefield series a bit like these podcasts on video. Um, we were talking to some government officials in they're from the UK in this particular case. And they kind of agreed with me apart from when I suggested that maybe it should be the reverse way round rather than actually have the, the big stick to beat them up. If they don't actually, uh, comply, actually the companies that are demonstrating liberals sustainability actually give them an incentive, maybe a 1% or a half a percent on corporation tax or whatever it is in the U S you know, if somebody can demonstrate that they're giving more back, uh, you know, I, I kinda think that's the only way it's gonna work. I don't think you're going to ever actually say right, you got to have a sustainability index or 32, because I didn't think you could ever calculate it. But at the moment, if you know anything about the way the eco numbers are generated for the site, the GNR the submission, most of that is guesswork. You know, it's so many employees, if you go, how many com guy car, how many come by road? How many come by rail, how many fly, multiply it by a rough figure to give you a number of your carbon footprint. Now, with all the things Chris was saying, possibly it will be able for systems to actually suck that data out at a higher level of detail. But I still don't think we're going to get there for probably the, in my lifetime, to be honest with you, but maybe I'm wrong. And in some sorts of hope I am, because it would be nice to, to have companies demonstrating their sustainability rather than just putting it on their website. Right? I mean, you, you see
Speaker 3:The legislation part, right?
Speaker 2:That's a lot of them,
Speaker 3:That's going to be on the, on the Western, on the Western world of things, right? You have smaller companies or even, you know, somewhat large companies in third world countries that don't have those requirements. So with that potentially, um, affect them, uh, because we stopped doing business or we, we limit the amount of business.
Speaker 2:Yeah. I mean, that, that, I didn't, I have an absolutely fascinating story here. Um, and for anybody listening, this question was the last delivery. We were talking to a lady and her brother from a company called[inaudible] and they make a specialist boxes that go into the perfume industry. They are really high end. Interestingly, they're all made in China. Now what's happened. There is the fact that they, they have told their manufacturers that this is the way it works. You know, you plan for delivery. And if you don't deliver, then obviously you're gonna lose the contract. And she was citing an example where, I mean, they have everything shipped via shifts. So these electronic ships or very, um, they're basically ships that are not, not basic as least pollutant as you can get a and their supplier in China phoned them up and said, I'm sorry, I can't get you the delivery on time. I will fly it instead, her reaction. And this is interesting because she believes thoroughly, and this was don't bother to ship it to me because she was not willing to forfeit the sustainability side over cost. So mere fact, this was going to be flown on a plane, was unacceptable to her. So basically said, no, next time you plan and you make sure you deliver via and you ship to the, you go to Europe. And it's just a good example. So I think to answer your question directly, I think we will demand it of them. So whether they like it or not, I think as a, to trade with the Western world, I think we will start demanding some of these things. And, and as soon as we start developing them, things will change. I mean, we did it with Japan. Yeah. Did Japanese Malays where, you know, they had hundreds of people, you know, paying them rice, basically the big conglomerates that bubble was broken, as soon as it started to get exposed, you know? And now the standard of living in a particular country in Japan has actually got better partially driven by some of the things that the Western world did not only by the West. Yeah. There was growth in the country as well. It became a far more economically stable and profitable country. But I think, you know, it's, it's a case of it's, it's not a regional thing. Sustainability to me is, and I think sustainability of manufacturers is a global thing and let's face it. We are all connected now. Yeah. It's, if you can't buy it from me, you can buy it from him. Then there's going to be a new player coming in very, very shortly, you know, because that's the way of the world or manufacturing unit. You have to be agile and that's playing back into having an ERP system and technology Chris's point that allows you to be very flexible, deploy it, have access to it where no matter where you are in the world, right.
Speaker 4:Sorry, say it again. I was going to bring up another example of, uh, you know, sustainability with it, even within our client base, w w we're working with one of the largest pulp mills up in Canada, and it's a joint venture, private sector and Canadian government. So there's lots of legislation, obviously in compliance that are going on. And, and it was funny cause Samuel you'd mentioned, you know, plants, tree, or cut a tree plant tree. I think they cut one plant for, uh, but it's only one portion of their, uh, sustainability program. And they are adapting over time. Uh, there are actually now starting to sell and manage their byproducts. Uh, so things like methane, uh, and, and other chemicals, which they, um, intake themselves with, they're also offering it in the market space. Now they're also selling energy. They're reclaiming water, uh, processing water, and also selling energy into the grid, uh, up there in Canada. So they need a system, uh, that can adapt to all of, uh, business requirements. And also, you know, uh, the energy portion may be only 2% of their business now, but it may be 10 or 15. Uh, and they're going to need to scale that. And it's a whole different set of requirements, uh, than just standard Poult manufacturing. So, uh, it's just another great example, I think, uh, of companies, what they're doing for the longterm, putting things in place, uh, and then having that technology to support it.
Speaker 3:So with, with, uh, the example that you gave Chris, I mean, they're, they have certain requirements that they actually have to, uh, you know, uh, achieve and they have to change processes a lot of times to do that. Now, if they don't, they can get penalized or not incentivized. Um, and there's that leaves room for other companies to change their processes on a more agile basis to, to make sure that they can, uh, keep up with the times, um, with that and the traceability aspect of ERP systems. How do you see the ease of change in ERP systems to adapt, to being able to trace, uh, number one, trace these, these, uh, uh, sustainability, uh, impacts and, um, change the process if needed, uh, at minimal cost?
Speaker 4:Yeah, so the changing processes is certainly a major thing that groups do need to, you know, that there's a trade off, um, you know, where, where do we offer our secret sauce? Where do we differentiate ourselves? Um, and how much of that do we need to change? Right. So every, every system, uh, usually is configured in a unique manner, uh, customization or enhancements one way or another. Um, so changing processes, you do need to, uh, identify where and where not to do that. Now, the traceability, uh, throughout the project, and how do you have actually measure results of this? Uh, those are, those are going to come from some KPIs. So a lot of our groups are, you know, during a business case, they're doing normal return on investment, normal labor savings, whatever it is, a cost savings, right. To identify the return on investment, but they are putting some, um, key performance indicators into the project and even into the system, uh, where they can start to track their, their goals and make sure they're monitoring, um, uh, and measuring their performance on those actual goals that they have set all too often. You know, especially when you're changing technologies, a lot of those nuances get lost. Uh, but we are certainly seeing that being, um, more of a guiding light, um, being those KPIs and where we're getting value from the systems,
Speaker 3:Are we seeing more and more that a different ERP systems are having this functionality built in
Speaker 2:As a core module or a core feature, as opposed to having to do configuration and add ons?
Speaker 4:Yeah, I think all ERP systems, and especially as they move into the cloud, um, certainly are becoming more rich and functionality. Now, there are little nuances, let's just say, for example, how somebody handles it, how a system handles the revision, uh, the remediation of a raw materials, right? That's that is a differentiator in the systems. Now you look at the process there, do we really need to handle, uh, revisions at the raw material level? Why do we do that? And how do we actually do it? Uh, and, and most, most groups, yeah. That would, that requirements that, uh, certainly needed. So, um, you're going to have to really dig into the system to figure out exactly how that's done. I would say, you know, the larger vendors, they have more deep rich functionality. Uh, so, and they also have the capability to really enhance these systems, uh, within, uh, within their own technology tool sets. So there's less reliance on third party applications and more of that functionality, certain being built into the systems.
Speaker 2:Okay. Now, Colin, um, with ifs, you guys are one of the leaders in, uh, the manufacturing ERP space. How do you guys handle it on you? You can ask me that question. I saw your, your, your mind spinning. Um, I think following on from everything Chris said, you know, even the great thing about ELP systems today, and if you put the ball up against each other in that top level functional for functionality, they're all very similar. So what matters is that ability to be very agile and change things quite quickly to not have to have processes that are fixed such that, you know, if you, if you fix everybody's processes and everybody has the same template, then nobody has a differentiator. If everybody's product is implemented in exactly the same way, then everybody's going to do everything in exactly the same way, where, and I think the differentiation, Chris, you used the word nuance really he's right. That tweaking the way an ERP system works to get the benefit from the way you do things that makes you different from your competitors that may be offering 24 hour delivery. It may be offering a bit of servitization in terms of customer support. It may be a whole raft of things, but being able to have those within your system is actually really key. One of the things we have been doing, though, that is quite interesting. We've been building a business value engineering into our application. So business value engineering is a way of starting out with a client. Who's implementing a product. In fact, prior to even prior to signature, it's part of our process now where we actually sit down with a customer and we go through the processes, look what their business challenges are and start mapping where our product is going to benefit them in those areas. And it's not just about generating an ROI because that's, you know, everybody has a spreadsheet that has an ROI that maybe it's slightly fictitious. It's about getting real issues out and trying to find out where the real value is in the organization. So that now is being built into our, our application. So where some of that data can be captured for real, you know, real numbers that we would have to transpose into a spreadsheet. We're actually capturing it for real in our application. And therefore we can go back to our, at the end of a project or in the middle of a project. And we can start looking at that. Maybe they wanted to get their customer service down by 4%. That was the target that's in there. Now what we're now doing is we're now measuring that in the background. So we're actually getting those real numbers. And it's just something we're introducing into our current version, the product, very, very similar to Kaizen lean manufacturing type theories, where you knew you set out with a target to do X, and then you measure against what you were doing and you achieve that. And then you do it again and again and again. And it's, it is very much like lean manufacturing kind of think, you know, we're really trying to do that again into the product. And sustainability is just part of that process. Sustainability for some of our customers might mean the difference between profitability or non profitability. I mean, I could, I could throw some numbers at you. I mean, these are, these are, these are my favorite stats. So I have these sort of my head. Yeah. The chocolate market. This is really interesting. So the chocolate mind back to food shop the market grew last year on average by about three and a half percent. If you put the word sustainable on your product, it grew by 22%. That is chocolate. This is what I'm saying. I'd come in from a sustainable source, fair trade, et cetera. Um, you know, living on somebody in a third world country, I mean, that's what it's, that's why sustainability is such a big subject. It's not just technology. It's not just cutting down trees. It's not just about how you manufacture stuff about your process or about your people. It's about all of those things under one umbrella. And I kind of thinking of whether you call it the circular economy, where you call it sustainability, whether you introduced traceability. I mean, we obviously have traceability built on our product. We sell to food companies as well as a ministry. Yeah. Um, aerospace and defense, where traceability is mandatory. You know, you need to be out. If you're flying around in a plane, you need to know that where that individual component came from. And you also need to know its service history as well. There's not just about when you sold, it was, you know, serial number ABC. Also, you need to know it was serial number ABC. It was also serviced on this date by this company who had these qualifications. And it was then replaced by this number. I mean, all of that as his model, um, has to be built into a product. Uh, and, and those are key capabilities, but you have to have any real PD solution today. And I know, I know I mentioned service are lightly, but I mean, we are starting to see in many of our industries, a lot more service orientated focuses from some of our manufacturing companies looking more at delivering that service. And some of that service is purely in their sustainability index. I don't know how, how good they are at saying they are within the rest of the, the macro economy, I suppose, in terms of, in terms of performance.
Speaker 3:Hmm. So I mean, as, as the, as the technology develops, we have to get the data from somewhere who puts that in. How does the, how does, uh, I mean, in general, where does the data come from? Cause now you're talking about a lot of extra fields instead of just a serial number you're talking about, uh, you know, service dates, where it came from, this is a lot of extra data and you're ticket you're going into, uh, you already had big data now it's bigger data, right?
Speaker 2:I actually not necessarily bigger data. It's connected data. Yeah, you must, it must. It can't, there's no way that all of the data of everything you're going to need is within a single product is highly unlikely. Yeah. We have a service product. We have a manufacturing product. Our aim is probably to, to join those together. That's a part of a strategy to have a service manual and manufacturing products on the same platform. But even if you don't have that, then you still got that data somewhere, someone out there, whether it's a small unit on an industrial estate is servicing the components that are going into an airplane. They have that data somewhere. You know, we're talking, you know, 2020 where most companies have some form of system, albeit maybe a very simple system, but they typically will have a system. So the cloud is partially the answer to that because you're now putting it into a place where it's easily accessible and it's in an accessible format. You've also got the fact that like with our product and like with other products out there, IOT edge computing touchscreens on the shop floor, capturing as much data as you can without human intervention is the way manufacturers are going forward. And nowadays we have systems that are capable of handling those volumes of data, you know, go back. When I, when I was in computing, I mean, my first computer was a Xanax 80. I had one K of Ram. That was it. You know, an army big, serious guys. You know, I bought my first hard drive when I was a group systems manager and engineering company, two gigabyte hard drive disk, I'll try and do it in dollars. It would round up in about$32,000, about two Meg drive,$32,000. Now my mobile phone. Wow. So we've got this acceleration of technology. We have got this connect data is much more easy to collect. There are many people out there.
Speaker 4:Uh, we partner a company called Dell Boomi. There are others, but, um, you know, where we, they are, they made a name for themselves to be able to connect systems together, you know, and applications like ours that are API driven. This isn't, this isn't difficult now to write these sorts of interfaces as Chris alluded it to it before, you know, we're not, we're not going back to the 1980s when it was called where every, every AOP vendor said, well, yeah, we're all going down this route. And therefore you'll be able to, by purchasing from SAP sales from Oracle, we need bill by the restaurant ifs. And don't worry a little work because that didn't work. But nowadays it is quite capable to connect systems together quite simply and in real time. And that's, again, the key, it's not huge batch updates of data anymore. Yeah. And we're certainly seeing more sensors on the shop floor, uh, that are monitoring, uh, production, data, quality data, you know, output data. Um, uh, and we've had a lot of those that data historically available, but there hasn't been a, an efficient way to collect it and make decisions on it because it always wasn't necessarily real time. Uh, and you know, the reaction time, uh, was just too long in order to make decisions. But now it's certainly a, you know, more accurate, I think, uh, the connected data is key. And I think the building up of data over time, uh, and the consistency is very important. So you take example, a manufacturing company, let's just say, we're going to, you know, quote a product, right. Uh, so ideally you're looking at what all the historicals, how many times have we made this product? What were the costs and what were the variations and revisions and what can we offer now to our client? Um, uh, and, and the sources of those datas maybe, uh, from procurement, they may be from quality. They're going to be from sales. Uh, there's multiple, multiple sources that go into, uh, let's just say one item master. Um, and those inputs have to have a consistent, um, you know, methodology of how the data is being collected and what's being put in or else it's going to be rendered, uh, you know, useless because you're not going to have consistency across the board there. Yeah.
Speaker 3:Let me, let me ask this. So we were talking about sustainability, but is it really just sustainability or is there some office and, uh, I'm sorry, uh, authenticity or transparency needed behind that. For example, you brought up coffee earlier, Colin, and, um, I know that, you know, fair trade was a huge thing, especially in the nineties with the launch of Starbucks. Um, there were some questions around how authentic was the fair trade, right? Who was getting the fair deal? Is that really part of the issue or is, or is it just a sustainability, uh, that people are, are really, uh, taking a focus?
Speaker 2:No, I mean, authenticity is that I kind of tied to rappel authenticity, traceability and sustainability. I know they're all different topics, but they are all, they have a common theme. I mean, I'll go away from coffee. Let's talk about alcohol, alcohol. Very, very interesting subject. If I told you the 12% of alcoholic drinks globally, I count a bit now opt out. Amazing. Yeah. So now this is not me saying this was actually market research by a company called Vanderbilt and that worldwide is worth around about$1 billion now. So how do you solve that problem? You solve it with technology. So if you take the likes of, uh, I mentioned their name, uh, a whiskey distiller, a champagne manufacturer, a high end French wine company. Each one of those is actually put, use near-field technology in the cap of their product so that anybody with a mobile phone can actually go up and they can get full authenticity and traceability back to the source of where it was manufactured, making it an economical for anybody else to counterfeit that product. And because they can rotate labels, styles, strategies, links, it makes it very difficult to counterfeit. And I'd say those two, three particular that particular industry, high end brands, but it's not just food and Bev and drinks. You know, it's the same in electronics. It's, it's the same way people are starting to build in these capabilities. There was one with a circuit board. I saw recently in an article where they were in the layers of the circuit board, they were building a near field sensor, such that when it arrived on site, the, the people, the other end could actually just scan the board. And if he didn't come back with a correct number, they knew it was counted. So, I mean, and this is where technology is going. He's getting much smaller. We're getting into this nano level where all the things we once dreamed about doing in terms of traceability, transparency, authenticity, you all were very difficult to do. Now. They're not because the technology is there. And, and that technology sort of nanotechnology small micro sensors, micro micro labels. So in some respects is accelerating and it will, and it will change again. We'll have another, we'll have another, another leap in technology probably in the next 10 years where all of that will become commonplace. And you, you won't think twice about going up to a packet or product on a shelf, whether it's something you're buying from home Depot or you're buying from, you know, a retailer or your whatever, and actually just putting a mobile phone and say, well, where did that come from?
Speaker 3:The consumer themselves could, could go in. And it would essentially generate a report saying, yes, this is sustainable 32%, or, you know, something like that. Yeah.
Speaker 2:And, and remember, there's an alternative strategy here for the manufacturers to do this because once you eventually got them connected to your label and you've actually linked them possibly to your website, which is where that data's held, that's the point where you up sell, cross, sell and do all the other bits of marketing that, uh, colleagues of mine are extremely good at doing, but you know, that, that it's worth it's, it's goldmine, you know, actually getting a customer to actually link to your product and then on their phone, give them everything else you want to tell them, well, I'm, you've just bought a bottle of whiskey. Have you seen this new one? We have a just releasing this, or, you know, you bought this pump. Did you know it could be serviced by each one of these service centers? Oh, by the way, this is the one nearest you. Yeah. I just think about how many friends, you know, I'm just saying pumps or I'm selling valves. And I'm actually selling the fact that any, anybody who's bought my valve could go up to my valve, scan the, whatever it is, the near field center of the QR code and get an instant list on their mobile phone of their service departments, where the service engineers are actually situations where they've got stock a replacement part, because that's not, it that's not dreamland anymore. That's just connecting data systems together and having the, the wit I suppose, in some respects to see that as a market opportunity to go and grab.
Speaker 3:So that definitely takes care of the office authenticity, uh, aspect of, of things. I know when I, when I lived in Southeast Asia, um, there were iPhones everywhere, and the only way they were such good, um, you know, fake I-phones that the only way you could really tell was the charging port, that's it like everything else was almost exactly real. They had redone the, the Android operating system to look exactly like Apple function exactly the same, but the hardware of course was better. Um, so this, what you're talking about is going to be, um, taking it from something like that, right. That you can easily, or, you know, fairly easily find a, a, a, a fake right to something I had never even thought about, which is putting an NFC, uh, inside the, of the cap of an alcoholic beverage to make sure that it's correct. I would have never thought about it.
Speaker 2:Well, ed, tell you why you mess with Google Johnny Walker after the show, after the class, and just see what it is. It is fascinating. And they're not the only ones. I mean, it's being done globally by anybody with a high end brand that is suffering from, you know, in fact, um, in the, in the European union, there's a thing called the falsified medic medic medicines directive, where every single manufacturer now puts a, a code on every single product. Now that may be on the outer packet, but in most cases on the packet. And that means when, when, and they register that in global database or a European database where the pharmacy sells that product to me and I go in my local pharmacy, their system communicates with the global database to see whether that number has been used before. And if that number has been used before, I it's been sold before, then I must be buying a false, false product now. And I think the U S has some, a similar type of system, but these are the sorts of technologies that we can, we're allowed to do. We have this thing called the cloud. We have these large amounts of volumes of data. We can now process, you know, years ago, you know, you'd struggle. You'd struggle to get it, to be read by barcode reader, let alone using a near-field center sensor.
Speaker 4:I think another quick example of that near-field technology, uh, you know, title list, uh, you, you talk about high end, right? So title list has high end golf balls, and they don't necessarily want to be so say through Walmart and or target, but yet they are, um, the, this technology is allowing the reseller channel to be really tracked as well. Um, there are quite a, you know, you talk about alcoholic beverages and there's some high end wines, uh, that have a black market and they're resold two and three times, and it is artificially inflating, the price and the demand. Uh, so technologies like that are, are making sure that they are going through their proper channels of reselling. And those reseller channels are adhering to those conditions that are established with you, uh, the, you know, the original manufacturer.
Speaker 3:So are the, uh, when you bring that up,
Speaker 2:The capability,
Speaker 3:He's there to not only track if it's being sold, but is it being sold at the correct price, because there are some pricing constraints as well that manufacturers put on specific products, like you are not allowed to undercut us. Right? Yep.
Speaker 4:Yeah. That's exactly right. Yep. And they will, do they get that information back? Yeah, absolutely. And, and, and the product will actually, some companies prefer to take their product back then to sell it at a discounted price. Right. Uh, maybe they have a, another channel that they can resell it at. You know, you talk about, uh, I think everybody's familiar with things like Marshall's and Kohl's right. Um, and those are things that are, you know, products that necessarily haven't met the code or the quality standards, uh, of the original manufacturer. So they're going through discount channels, uh, and then they're often sold and resold at margins. You know, other people are making money off of, uh, an original manufacturer's product that wasn't, you know, intended to. So that does help mitigate a lot of that.
Speaker 3:Now, going back to, uh, Colin, um, on the industries, right? I mean, we talked about the alcohol industry, coffee, um, you know, different things. What industries are going to find this the hardest to be sustainable, because you have, uh, example, Chris, you know, we're working
Speaker 2:With a pulp mill, you're going to have byproducts that are going to be contaminant and not reusable they're, they're considered toxic. Um, and you know, maybe they're not, maybe they're not sustainable. What kind of industries are going to struggle the most with this? Yeah, I think the more industrial manufacturing is going to struggle. Um, I think high-tech may, may have some issues. I think the process injuries, food and Bev chemicals industries are always going to have a problem in terms of co-products by product and also the nature of how they manufacture these things. You know, I mean, if you think of, well, if you think of a cement manufacturer, who's making cement, you know, as an aggregate into cement, that there are lots of chemical processes going on there. So, you know, capturing all the water coming off of the effluent plant, all of them are doable, but they're not necessarily sitting in the sustainable side in the sustainable wing. And I think they, they would struggle to be, to say they were truly sustainable because by inference, they're digging out the ground and turning into something else. At some point, you can't put it back because you're changing the way it is. But, but I think every manufacturer, even companies like that, if you take an engineering company that is manufacturing, anything, a compressor today could be looking at that product and saying, right, we're going to reengineer this product to be sustainable. So we're going to actually look at all the components that are in there and see how many of them we could turn into recyclable products, such that we can take them back, or we can have another manufacturer taking them on our behest. Who's actually then either reusing them, recycling them, melting them down, doing what they do. Um, there's a whole industry recovery covering golden silver from circuit boards. You, there are, there are manufacturers out there that actually process these things to get those, those materials back. And that's why it's very difficult to pinpoint sustainability at an individual company, because it's a chain of companies that potentially, you know, if you've, if you've only factored a product, it, you know, if the golden silver is recoverable, that has to be somebody who would covering it. Um, so I, I think every industry can do a bit, but I think some should, some, some, uh, will find it harder than others having said that, you know, BMW say that their white gold, which BMW it is, but they say it's a hundred percent recyclable. I'm not sure why that claim, but I read it somewhere recently. You know, that car is a hundred percent recyclable. That's quite an ambition of a Volvo just, well, I say recently they appointed a director of sustainability, you know, and I pinpointed the car industry cause they probably have got some of the holidays things with tires and plastics and the sorts of things that go into a car. Um, but they're doing it and they're doing it because it's all about brand and it's all about sales.
Speaker 3:So their claim is a hundred percent of their car can be recycled.
Speaker 2:Yeah, it is. I think it's a specific model and it may be one of those cars that will never ever get to manufacture. I mean, Volvo we're claiming that by 2025, they're going to have 25% of all plastic within their vehicle will be I think, recyclable. Um, which didn't seem very high to me, but I mean, I, I kind of might've misread the comments. Don't quote me on that one.
Speaker 3:Right. So now we get into, um, you know, you have your end product, maybe that's recyclable, but you have a company like Tesla, right? Oh, it's an electric vehicle. They have great batteries, but the process to make those batteries, the process to make those vehicles, that's what, uh, we really need to tackle, correct? Yes. Yes. Because you're dealing with,
Speaker 2:You're done dealing with rare earth materials, which are, you know, there aren't millions of them all over the world. In fact, China, I think in South Africa is the, or Africa has some of the highest quantities of those bureaus say dealing with LED's and you're dealing with some pretty nasty chemicals and that's purely down to physics. That's the way it works. You know, physics. That's one of the interesting thing about battery manufacturers. It's all around physics. You can't change it. You can, you can make it more and more and more ambitious like we did with electric motor with rare earth magnets, but it's physics, there is an end to it. You you've got to stop, but that doesn't mean to say that just because you're producing it in that way, that you can't take the fumes out, the effluent out, you can't process it because you can it's whether it's cost effective to do it at the moment. Probably not.
Speaker 3:Right. I mean, you have something like, uh, right now, uh, the, the lithium ion batteries or the lithium batteries, they're, they're all chemical reaction. Right. Um, but there's been a lot of focus for many years on the, uh, carbon nanotube or graph graphing, uh, batteries, um, which are just starting to come out and they're really, really efficient. And he don't necessarily need to wait for a chemical reaction for the charging, but they're extremely expensive to make. Um, just cause graphene is, is just a, an extremely expensive material. Uh, the process, we don't have it down. Um, so I mean that could, you know, that kind of innovation could help alleviate, you know, the battery industry. Um, but what does a process look like? Um, and either one of you, you know, can, can, can go ahead and, and jump in here. But if I'm a company and I make a water pumps and I'm like, well, I need to make sure that I can put sustainable on that name. What is the, what does the process look like? Um, in, in general to go from, obviously we have to examine how we manufacture the product, but
Speaker 2:Getting that information and dealing with the partners and modifying our ERP system. And I know, um, you know, Colin with IMS, you can answer that specifically. And I think Chris, you could potentially give more broader, uh, example of, uh, maybe some different, uh, ERP systems and how they go about it. Okay. So from an ifs standpoint, I think I partly covered this before. If, if you, if you look at that whole cycle, raw material design manufacturer, ship use consume repair return, that that whole, that is the true sort of cycle of which when that repair is done, or the replacement is done, you're going to get some element of waste, which you're going to aim to minimize our strategy is quite clear where we're leading in the Gartner magic quadrant fulfilled service management. We have service management built into our own ERP product. We have an ERP product that does design PLM. So we have all the components and our strategy is quite clear. And I think we've made, made it quite clear is we will bring that together into a single solution. So yeah, our view of the future is service will start becoming more and more important to manufacturers. And I say service service, because it's the, it's the it's that component you need having shipped the product. Yeah. You need the other bit to say, okay, somebody has repaired it, somebody has recycled it. Some of those recycled materials are going to come back to me because they're reused. And I think that whole circle is the way manufacturers are going to start looking. And therefore I'm an ERP point of view that has to be a strategy, whether that's single product or multiple products, you know, our strategy is probably the primary one longer term to have everything in one place. Um, but again, that may well change, but it will be one solution with one common structure underneath it.
Speaker 4:Yeah. I agree. I think the connected data, you know, is going to be critical to that. So real time information and car, you alluded to the supply chain component of it, but, you know, even when you're on onboarding a vendor, uh, you, uh, you can have certain processes, uh, you know, it was, let's just say you have your onboarding checklist. Um, and you have to make sure that yeah, that vendor is supplying the information that you need around their components and their sustainability methodologies. Uh, right. So you start to add up those vendors, um, and you have more of a database, uh, confirming what you, what you need there. You also have the process, some manufacturers you use the water pumps, um, you know, they may be outsourced during the manufacturing process, right? So not only are you bringing all your raw materials, you have some sustainable assembly, uh, practices, uh, but that, that information or that product, it has to go out, uh, to an external, um, uh, process. And what does that information look like? How has it, how has it being floated back and forth? What type of technology are they using and then where does it go from there? Does it come back in, uh, or does it go directly to the customer? Um, so I think again, the, the information flow in real time data, not only connected to your vendors and suppliers, but also connected to your customer for real time feedback, as well as very important.
Speaker 3:Okay. Well, it looks like we're coming up on our hour here, but, um, this is actually a very interesting topic. And I think that there's a lot more that we can talk about besides just manufacturing, right? There's professional services, there's engineering, there's a lot of different, uh, industries that could benefit from sustainability. Um, so Colin, if, if, if I could, um, we'll have to get you back on here, maybe with a, a team, a team member, a Northern happy Chris, I definitely would, uh, would like you to join on that as well, uh, for a broad, a broader view of the entire industry and how it works. Um, do you, any of you have one last bit to say, what would you say the number one takeaway is here?
Speaker 4:Uh, may it's every manufacturing company.
Speaker 3:We need to think that sustainability is no longer
Speaker 4:Something you pay lip service to, it will become one of the most important features in your products and your strategy going forward. So just
Speaker 3:If you fail to do it, you'll miss your massive opportunity. You're going to be outpaced.
Speaker 4:Yeah, absolutely. Yeah. And from a vendor standpoint, I think, you know, the vendors are building their systems in a different way. We talk about this, uh, authenticity and transparency customers are requiring certainly more transparency on how things are done from a technology standpoint and, you know, service methodology standpoint. So, uh, large ERP vendors are certainly realizing, um, that their customers are demanding more,
Speaker 3:Um, and making those adjustments. Alright. Perfect. Well, thank you both. Um, and we'll see you next time. Thank you. Thank you very much for more information on how your company can benefit from economic sustainability and ERP and manufacturing. Please contact us@seventwozerofiveonefiveonethreesevensevenorvisitusonthewebatwwwdotpanorama-consulting.com.