Supply Chain Now Episode 294
Prefer to watch the podcast in action rather than just listen? Watch Scott and Greg as they welcome Cliff Isaacson with Blue Ridge to the Supply Chain Now studio in Atlanta, GA.
For Episode 294, Scott and Greg welcomed Cliff Isaacson with Blue Ridge to the Supply Chain Now Studio in Atlanta, Georgia.
[00:00:05] It’s time for Supply Chain Now Radio Broadcasting live Supply chain capital of the country, Atlanta, Georgia. Supply Chain Now Radio spotlights the best in all things supply chain the people, the technology, the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good afternoon. Scott Luton here with you live. Once again, supply chain. Now welcome back to the show. So you may be having dejavu. We’re gonna be chatting today again with the Supply chain technology leader that’s helping organizations make bold bets and better decisions. On a quick programing note before we get started, though. First, you can find us wherever you get your podcast from. And we ask you, you’ve got to subscribe go missing thing. Secondly, we I think some of our sponsors allow us to bring these best practices and innovative ideas to you, our listener. They range from the Effective syndicate Vector Global Logistics Supply chain real estate dot com Verusen talentstream, you name it. And many more. Check out our sponsors on the show notes of this episode. Okay. We’re gonna dove right in. We’re gonna welcome in our two co-hosts here today. That’s going to help me wrangle the conversation with our featured guest. First up, we’ll hear way founder and chief evangelist with backbeat marketing Will. Hey, doing great, man. Good to see you. Great to have you back. And Greg White Serial Supply chain, tech entrepreneur and adjutant and trust the device.
[00:01:30] Craig, how you doing? I’m doing quite well. Adj., a._p, adj. and the evangelist’s. That’s going to be a new buddy cop movie. Yeah, yeah, that’s right. That’s right.
[00:01:40] Well, in our feature yesterday, we’re I think our listeners are in for a treat. Cliff Isaacson, EVP product strategy with Blue Ridge. Cliff. How you doing? Good. Good to be back. Great to have you back. And we’re gonna keep our fingers crossed that Murphy’s Law does not enter into the conversation today. But nevertheless, looking forward to dove more into your background and your story. And then, of course, the cool things at Blue Ridge is up, too. But first, the news desk. Yes, Will and Greg.
[00:02:09] Was Malcolm in a news team talking about just handed to me this just handed it to you. Literally. This was just released a few hours ago. Our friends of the show, Resilience 360, they monitor every supply chain disruption around the globe. Yeah, they have been on top of this Corona virus outbreak. Obviously, it’s a you know, there’s been a terrible and tragic loss of life, but they are looking at it from the perspective of global business, global manufacturing and supply chains that are continuing to feel the effect of the corona virus epidemic. Factories, Logistics providers looking to resume operations. They’re now facing labor shortages and regulatory uncertainty with, you know, all of the all of the things that are getting shut down. So today they released the top 10 or not the top down part me. They revealed the 10 supply chain risks from the Corona virus outbreak. And I was going to give you just place top level what they are. Yeah. So number one, lockdowns causing labor and supply choices in factories. That’s because of city-wide lot. Lockdowns because of quarantines have triggered label and supply shortages as Chinese authorities seek to contain the virus. That’s that one seems pretty obvious, right? So, number two, regulatory uncertainty slows the restart factory operations that manufacturers, manufacturers are facing. The challenge that the requirements of these right. Of the regulatory agencies in China, they you’re dealing with provincial, municipal and even district level as they seek to restart the things that have had to stop that have had to stop because of the virus. Number three, obviously a big one. Public health requirements impact Industrial operations. Number four, suppliers invoking force majeure causes on the rise. That’s an interesting one. Right on top of production, delays in orders or companies dealing with suppliers in China will have to face legal defenses that invoke force majeure. Clauses for nonperformance is almost completely unused. The force majeure work. Right. And so being used there, though, number five.
[00:04:20] Purvey, by the way, you said it better than asked.. said déjà vu. Right.
[00:04:24] So so you get bonus points for your French from my French country out west by west, Tennessee, France. Yes, I love it. All right. So number five is prevention. Exactly. Prevention.
[00:04:37] There we get provincial border checks, exacerbate trucking shortage. Right. So because of the border checks, it’s slow. And it’s a I mean, they have to do it, but it’s slow and everything down. Right? Number six. Closed borders, delayed movements to and from Vietnam and Hong Kong, which is also a problem because that’s where a lot of these manufacturers are shifting. They’re shifting. Yeah, their production and reshoring, a lot of the right materials, right? The tariffs and whatnot. Yeah. So even those areas are being affected. Number seven, labor shortage causes congestion at airports and seaports. You know, again, with limited capacity available. This is a good one. Number eight, blank sailing’s reduce ocean freight capacity out of China. Mm hmm. Because also as a big problem that they’re having is that this is also lunar Chinese lunar new year. And at the same time. Mm hmm. So they’ve extended that until February 9th. And shipping lines have announced extensive blank sailing programs for vessels until the end of February. What’s blank sailing? It basically means that there there’s not anything on the ships. Yeah. Really? Yeah. Number nine. Wow. Lots in it, right? Ship number nine, limited air and rail cargo capacity to increase prices because there’s not. There’s limited capacity again. So that’s making prices drive up and then not. And then number 10, which is obviously things that we’re feeling here. Ripple effects being felt overseas. You know, China is a big provider of manufacturing and production around the globe. And some of the industries impacted. I mean, just to name a few automotive, pharmaceutical, medical technology and, of course, domestic airlines. Yeah, right.
[00:06:20] You know what was interesting, first thing as I hear listen, you go through all those tin tin items is just win. If a one wonders why Supply chain is so tough to manage. Just when you think you’ve you have responded sufficiently to the trade war. Along comes the next thing, right? Well, it’s LLC demand. I see all this thing and it’s constant. It’s a constant churn. And just I mean, putting out this fire just to get to the next one. I mean, that’s what folks in Supply chain Supply chain managers make the big bucks.
[00:06:49] Yeah. And that’s that’s internationally. There’s there’s equivalent issues domestically with capacity shortages, label labor shortages. So it’s not any easier for the right operating just North America, which is why companies are paying big bucks.
[00:07:04] They get more access to the information. So we can we can make better decisions faster. Right. Right. I know that we can talk more about it, live more. But decision making here today with Cliffe and Blue Ridge is up. So top 10 list. I love that. Yeah, we will publish a link to that in the show. Notes. Yes. Good work over it. Resilience 360 and. Oh, and Malcolm. Malcolm.
[00:07:28] Yeah. Yeah. Malcolm wanted to clarify. Blank sailing’s.
[00:07:31] It’s mean it’s when it’s when the sailing is canceled by the carrier. Oh that could mean the entire shipment in string is canceled altogether. OK.
[00:07:39] So. So there are ships sitting in the harbors. May ask. chock-full but going nowhere. Yes. Right. Yeah. Malcolm says that’s correct. Okay.
[00:07:47] Yeah. Like that. We all got Maui is best any. Yeah. And he does need to maybe give him a raise. Yes, I agree.
[00:07:54] We gotta keep him. We are Keith on board. All right. So Greg.
[00:07:58] Well, I have two announcements. Okay. First, I want to announce that if anyone is expecting me to be objective in this particular episode, forget about it. So it sounds like it’s from a movie or scene. Forget about it in the spirit of full transparency. I am founder, major shareholder board director for Blue Ridge and big fan of of what the company has done and continues to do. So we’re always transparent. Yeah, it’s transparently important. Yeah. And then secondly, I think and this is what’s really important from the news standpoint. So the Blue Ridge has been putting out the state of wholesale supply chain. Right? Just about a third year. About every year. Yeah. For the last three years. So. So I’m interested to kind of get you guys. You guys are a little bit closer to the two. I mean it just came out on the twenty eighth, I think. Right. Jane. Yeah. Okay. So I’m interested to see what you guys have in terms of takes on, you know, what you found. So in the priest show run up, we talked a little bit about some pretty dramatic changes in in stats, right?
[00:09:06] Yeah. You know, and Clifford, our on a on a webinar just last week talking about this. But one of the things that I found the most. One of the most interesting things from a year by year basis was the increase in people measuring their success by forecast accuracy. And I wondered if you wanted to to give a thought as to why it’s starting to starting to rise finally. You know, because if you look at the numbers, it was 30 percent in twenty, twenty eighteen that they measured it by forecast at accuracy. These these wholesalers twenty six went down dip down to twenty six percent last year and then the twenty twenty report shows almost 40 percent. So that’s 10 percent over every three year period.
[00:09:48] I think people are getting smarter. You know we talked about it last week. Some of the metrics are going to vary by usage because it’s a tradeoff. It’s typically a tradeoff. Between dollars invested and service levels that are going to an impacted versus forecast, accuracy should only go up. And I think you may be one of the other things driving it is that people are starting to see significant improvements as they add technology. Yes, they add demand forecasting methodologies and and demand sensing.
[00:10:18] And and they’re finally able to to capitalize, I think, on the wealth of data that’s out there. And we’ve seen I mean, you know, we talk about this a lot. We’ve seen a big impact by a-I and other tech technologies that are that are able to capitalize on the rich data that you’ve got of customers. And another thing that’s shifting in distribution is. I have to say it. Look, the number one concern of all distributors is the impact of Amazon business on their business, right? That is universally the number one concern that distributors and wholesalers have. So so that being the case, they have to be more predictive forecasting and responsive to the customer to meet the the demands of a wholesale consumer that are much more like a retail consumer. And and I think it’s as much because they’ve been forced into it. And the data is available and the technology is available to capitalize on it as anything else. Mm hmm.
[00:11:19] And just to clarify the survey that that Blue Ridge has now done for three straight years, they survey 150 Blue Ridge customers and then all of the National Association of Wholesale Smart, Brief Readers and end up and subscribers. So it’s not very extensive. Chuck Berry, extensive survey. Yeah.
[00:11:41] So here’s a stupid question. But, you know, I want to kind of load before we dove into Cliff’s journey and the story when we say demand planning for folks that think they know what that means. But there’s still a little bit of a doubt in your mind. What are we talking about?
[00:11:56] We’re talking about forecasting out what consumers are going to buy, what their end customers are going to buy. If you’re a distributor, you’re you may be selling on e-commerce channels or direct to consumer, but you’re additionally selling to other businesses, retail potential, even other wholesalers. And so understanding what that demand pattern looks like allows you to plan ahead, because if you want to meet that demand, you have to have the inventory available. You know what to stock out, right.
[00:12:23] You don’t want to stock out. And so correct me if I’m wrong, I know these three will if you want to look at historical numbers. But that’s not the gospel truth when it comes to demand planning, correct?
[00:12:35] That’s right. There’s other things coming up on the horizon that are going to just that. Events, promotions, pricing activity.
[00:12:43] Mark Mean, the market. Look at influences on the on the customer. I mean, you know, the thing that you have to think about when and this is a big transition mentally and technologically for not just distribution but also retail. For so long we have been forecasting the item. Right. And for years we’ve been preaching look at any item in front of you and tell me what that item does, how that item moves. What are what are the tendencies of that item? Right. All these items that are sitting in front of us, they haven’t done a thing. Right. What you’re really predicting is the customer and their actions and those influences on the customer and to what extent and why they will influence that customer. So I think where companies are coming from now is the why is as important as the how much it may be. Even more important is the why. Because, you know, in in distribution, you have a lot of items that are very spiky in terms of demand. The how much doesn’t even matter. It’s the win. And the why will that item sell? Because you have so many items where you sell nothing for weeks and then you sell 500. Why? Why is the only question that really answers that problem?
[00:13:53] And that does get you away from this reactive historical view and trying to. Exactly. To use that to predict the future versus what you you use the word predictive. Yeah, she is looking at these activities and influences.
[00:14:05] Yeah, exactly. Yeah. Yeah. Well you say something. No, just that it’s also has to do with just the real time things that come up. And I think that’s where a lot of this technology, certainly Blu ray technology has has addressed that, that you can start to get those factors and and factor them into your demand planning and forecasting. I mean, everything from certainly seasonality is all right. It’s going to be a big thing. But I mean, the things that happen, I mean, like the coronavirus, for instance, or. Yeah. You know, I mean, just how is that going to affect, you know, the way that people are shopping and for certain items? I mean, that’s something to certainly to consider.
[00:14:41] Yeah, absolutely. Okay, great. And fascinating backdrop as we dove into the conversation with our featured guest. So, Cliff, and this is your second topic, would you call it third time, Michelle, but your repeat guests. So we love when folks come back on the show. So much has changed since we first met. Like is look, first of all.
[00:15:02] All right. Yeah, yeah. No, I think that’s style y wise. Wise and. Yes. So let’s let’s go with that.
[00:15:09] You say see clean shaven last time. Yeah, sure was. All right. So first off, like we always do, we want to find out more about Cliff, the person. Right. Cliff Isaacson, we know where you were born. You were you grew up. Give us some. Give it give us the skinny on your your upbringing church.
[00:15:26] Sure thing. Just flew in from Chicago, my hometown. So born in Chicago, but actually raised in the sticks of northern Michigan. That’s right. So a very remote area. U.P., you went out to the peninsula. You’re kidding. I grew up, you know, your hours, whether I don’t love cold weather. I live in Atlanta for a reason. Very wife and I are happy not to chip ice off a windshield ever again. Yeah. Speaking of Chicago. Yeah. Right. So it was it was good. It was good to to grow up there. But I wanted to get out. You know, everybody wants to move away and then this is it.
[00:16:02] Did you spend a lot of time in the city? How far were you from Chicago proper, I guess?
[00:16:06] Seven hours north. OK. You know, I was four hours from Green Bay. OK. It’s closer to Canada. It’s very close to I I grew up watching Canadian television. It was the strongest signal back when we had signals really for television. I didn’t even think about that hockey fan, a hockey fan. I grew up in hockey country. Actually, though, the town that I grew up in is the birthplace of professional hockey. Really? So. So what town is that in Michigan? OK. So the home of Michigan Tech University. OK. All right. So a university town, very small university. But, you know, it’s a lot of professors, kids and a lot of university kids, which I grew up with. So, you know, a bent for technology and education and math, which is what I really you know, I was a nerd, but it was a nerd in the middle of the woods. So I’m also doing all the sports stuff. Yeah, skiing and swimming and cross-country and getting out in the wild. And then when I’m not, I’m on a computer programing.
[00:17:06] What was your boat? A sport that your best at? I was a pretty good swimmer. I’ve never been a really strong runner. I’d once we had kids, I switched to running because it’s very time efficient. But I do triathlons and my unfortunately, the swim is always the strongest leg. And then I spend the whole race after that getting passed by faster bikers and runners.
[00:17:27] So guys with long Lu. That’s right. That’s right.
[00:17:31] So clearly early on, you identified a love for all things man. I think the puter programing and data and stuff like that was. Is that what you majored in, in college?
[00:17:40] I was computer computer science. OK. It was an engineering degree back then. Northwestern. Down in Chicago. I was tracked it back to the big city and the cold weather didn’t scare me off. And and I got a ROTC scholarship. So the Navy was paying for it. You know, private education is a little pricey. Special uncles for Uncle Sam picked it up. Yeah. Which is always nice.
[00:18:03] So you graduated with a computer science degree from Northwestern. Correct. And then would you do?
[00:18:09] I spent a couple of years as a nuclear submarine officer. And I learned what I many poor choice life choices along the way. I don’t know if that was one of them, but it it’s a hell of a story. Oh, yeah. Yeah, it is. It was good experiences. There was some you know, we had an explosion at test depth and we were testing some equipment used by the seals. And it was an R&D submarine for for many my years. So it was some fun stuff.
[00:18:39] We do watch the hunt for Red October. Yeah. So you pick out all the all the fallacies in there.
[00:18:45] So that was that was my movie. You know, my brother is a retired Navy pilot. And so his movie was Top Gun, of course. So guess which one was a little bit cooler? Mean, I really I really latched on to hunt for Red October. It was actually pretty accurate.
[00:18:59] All right. So you are in a very small percentage of people that live the submarine life. That’s right. So what’s one thing that most people would not even connect with? What it takes to operate a submarine or live on a submarine or, you know, get deployed? What’s one thing that would really surprise folks?
[00:19:22] You know, this is a bias that submarines have, but the International Space Station and astronauts, they always send the pilots an argument, as always. Now, you really ought to send the submarine. People were used to small spaces where if anything goes wrong, you’re problem, you may die. So I don’t know if they’ll start looking that direction. It’s also a lot of engineers and knowing my brother, actually, he’s a pretty good engineer. I can’t give him too much of a hard time. What do you fly? Forecki Lu fixed wing. He was actually up here in Atlanta North Vetlanta for a while flying fixed wing and then S.H. 48 six helicopter, which isn’t anybody’s first choice. But he did some interesting missions. He was deployed doing on a Marine Corps transport, doing search and rescue. So he’s got some stories that you’ll talk up quite a bit.
[00:20:13] So, you know, you may not know this one of your customers. Dan Schlager, the CEO of CERP, was a submarine commander.
[00:20:22] I did not know. Now to I have a lot to talk about conversation.
[00:20:26] It is fascinating. He was very young on a on a submarine of what he called Rhodes retired on active duty. He had a number of people who were just kind of riding out there. It’s fascinating, fascinating and fascinating for how its shape. His leadership. So I think you guys would have a great go. We’ll have to ping him.
[00:20:44] We have our customer conference coming up, no pun intended. So that’s right. One thing. All right, Rob. Look at that. Drop that one in there. So, right, Ping? That’s right. All right.
[00:20:57] So it got Sean Connery was pretty country, strong country, country friend, the country Scottish. I just. I can do anything. Country flexible.
[00:21:08] All right. So, Cliff, after serving your country in the U.S. Navy, what. Tell us about your transition into the private sector and where you started.
[00:21:19] I. I wanted to do grad school and I was you know, it’s still towards a bent for technology and math and science.
[00:21:28] So I looked at M.I.T. and Carnegie Mellon. Scott Luton Boston is kind of expensive. And I like Pittsburgh. I actually love Pittsburgh. Good blue-collar town. But I worked there for a year first. Well, get some programing experience back and learn industry. And, you know, you’re a little bit blind coming out of the military and with how things are done in the business world.
[00:21:51] So it was good. It was a good year experience, then went to grad school at Carnegie Mellon, focused on operations, research and more math stuff. Wow. And then I did strategy consulting after that.
[00:22:03] Ok. So those were the first few years after in the private sector. So. Right.
[00:22:08] That’s right. And, you know, doing consulting work gets more viewpoints on industry. It was actually one of the projects was strategy work at Goldman Sachs. OK. Now, Manhattan. So that was an interesting project. Nice. Definitely a far cry from the submarine and steel.
[00:22:24] So. And Hope in Michigan. That’s right. So is it.
[00:22:28] All right. So when did you get in getting into technology? Right. Where where where you are now. Blue Ridge is now. What was what was your first role? What you’d call a technology role.
[00:22:40] Technology role. So I I got the bug. This was ninety nine is still doing the consulting work. And another person on a project also had a supply chain planning background and we started chatting and it was a hot startup environment. So we left and founded Supply chain Software Company here in town.
[00:23:02] And that was in trucking Logistics and it was doing a bit optimization for freight for flatbed and drive van. And we built dock scheduling and some other capabilities into it, raised a lot of venture capital and sold that in 2003. Okay. So I was a co-founder and on the board and chief technology officer. So I was, you know, went from strategy consulting, which was a technology strategy consulting right into supply chain planning. I mean, I’m a hardhat and steel tipped shoes person. You know, when you’re working on Wall Street, you’re wearing a suit. Sadly enough, you miss the days of a little bit more down to earth. Yes. And Supply chain is is good stuff.
[00:23:45] I agree with you. It’s practical. Your problem solving is a lot of esprit de corps and supply chain. You know, I’ve always appreciated. Right.
[00:23:56] And I think it’s giving back to society. It’s doing something that’s important. You’re delivering goods that people need. And some of those are medicines. Yeah, those are literally lifesaving. Right. You’re saving lives indirectly and you’re taking inefficiency out of the system, which is, you know you know, math and science is our tools and toolkit that are applied to solving real problems. Yes. So your theories are tested right away? Yes. Right. I’m very orderly. You are good or bad. All right. You are in it.
[00:24:26] Yes. You know, it reminds me, I cannot remember the perfect Lexis tagline, but it’s something like the relentless pursuit of perfection. Yes. That is like the perfect tagline for Supply chain, because you’re constantly you know what? What works well in February of 2020 may be different. The first week of March 2020 might be might not make it to in the month in terms of reinventing the process or fixing this problem. That’s right.
[00:24:51] And we’re going to kill that analogy. It’s also driving that Lexus down a broken road with bridges that keep exploding out of all the time.
[00:25:01] You’re a quick study. I like that, Cliff. All right. So let’s talk about when you joined the Blue Ridge team and what that company does. Let’s talk about your transition in the Blue Ridge first and then let’s talk more about what Blue Ridge does.
[00:25:12] Absolutely. When we when we sold the startup, I ended up going to work for a professor mine that specialized in inventory optimization. So I spent a number of years doing inventory optimization, transitioned over to price optimization for Industrial goods, retail, actually a little bit of time in hotel and rental cars. And so I had a startup that I had finally gotten the bug to do again in price optimization for distributors and. When I had some connections at Blue Ridge and Jim, the CEO reached out to me and we started chatting. And so I joined to head a product strategy as well as them acquiring price optimization. I’ve written quite a few articles and have really advocated demand shaping, which is really using price optimization and supply chain planning together to influence that forecast, that demand forecast. And I think it’s proving out in the marketplace where I think Supply chain planning used to be in a small box and it’s really growing. All right. And I think price optimization, which used to be this niche field with many facets and actually separate subdivisions, retail pricing, business-to-business pricing is actually getting folded into supply chain.
[00:26:29] Ok. So when you say pricing optimization, we’re talking about firms that are trying to they’ve got a cell phone and should they sell it at $99 or $990?
[00:26:40] That’s exactly right. You know, it’s the standard truism. When you raise price, you will tend to sell less of something. People will buy from a competitor. They will not purchase it, make the purchase decision if they have that option. And, you know, it’s it’s relatively easy to do in retail because it’s a consumer. It’s a it’s a strong demand signal. It’s trickier with Industrial goods. Distributors have a very complex problem to solve because they actually have that retail business to some degree. But then they have this negotiated price. And that demand signal is, you know what I would say, convoluted, convoluted. And it’s makes it harder to measure price sensitivity.
[00:27:19] Historically in distribution. Pricing has been ethereal to say say that’s given a desk. Yeah, it’s emotional mostly. I mean, a sales rep is on the street sometimes going, I got to sell it for a dollar sixty five boss. Or though they won’t buy it. Right. And there’s no there’s no real support around that. And what pricing optimization does is it creates a lever level of measurability that is not if not infallible. Yeah. It’s at least a solid argument for for how to how to impact price to impact or drive price to impact to. That’s right.
[00:27:56] Demand for many distributors. They’re also relying overly relying on their suppliers and they’re doing simple cost. Plus, they’re they’re taken what the supplier is recommending for promoted price or the price coming in. They market up and then they sell it at that rate with some sort of discounting, which has nothing to do with what people are willing to pay to pay.
[00:28:20] Where does gut instinct come into the. That’s where the sales reps.
[00:28:23] Yeah, that’s right. Yeah. Phil’s reps handle this.
[00:28:26] I will never discount the art of pricing. Yes. You know, there is some degree of that. But, you know, supporting it with science, supporting it with, you know, the concept of measuring where something is underpriced, overpriced, it works to the benefit of somebody that, you know, may maybe it’s an organization with rogue sale. Yeah. Because the salesperson is typically putting more money in their own pocket and they’re getting more commissions because they’re selling more. They’re raising the price on things that it’s probably money being left on the table, the proverbial table, at least inform the emotion.
[00:29:00] Right. I mean, at worst, what a pricing optimization tool does is inform the emotion. You don’t have to change. Right. Right. But at least you know what? You’re leaving on the table. And that’s where I think pricing optimization in supply chain planning that they have a great confluence is that a lot of decisions in supply chain planning, execution and replenishment and allocation, things like that. Mm hmm. A lot of those can be very emotional. I just know if the number of times I have to look at the number of times, just like in front of me just last week about that I well, the number of times that I have heard this is why I have a pet peeve number of times that I’ve heard people say I just know is is distressing and and it’s counter to the goals of most businesses.
[00:29:47] So if if only to inform those people that just know I, by the way, was one of those people I was in store operations, I I was one of those people who actually said I can forecast these items better than any machine in what nobody really understood was I was only looking at three items. Mm hmm. And in truth, anyone could have forecast them because they were the fastest moving items in the store.
[00:30:10] Right. You get deep in the assortment, those C and D items.
[00:30:13] Good luck in anywhere. Right. And and the truth is, it’s just the law of large numbers. Everyone was buying it. WD 40, pick the item in an automotive store, right. Everyone was buying it. It was easy to predict. And the nuance is around those items that are influenced by something other than just mass demand.
[00:30:33] I think when you you already brought up what is a huge contributing factor, which is you mentioned store operation. Retail has gone through this, Yes, Amazon and they’ve come in and price optimization. Price sensitive, be willing us to pay. Measurement is has become part. You can’t survive without it. Yeah, that’s table stakes and retail. And now distributors are you know, we’re staying in front of that because distributors are studies in there. They want to sell directly. They want to bypass a retail channel potentially. E-commerce has allowed that. But Amazon has come in price sensitivity, visibility and transparency to pricing has applied. And so it becomes very critical for distributors. Yeah.
[00:31:17] All right. Got it. So we’re talking with Cliff Isaacson, EVP product strategy at Blue Ridge. Cliff. What does Blue Ridge do?
[00:31:25] Blue Ridge gives you a better forecast. You know, we were really something like that. And, you know, that better forecast really allows two different outcomes. One is it reduces stock outs because you’re more efficiently deploying that inventory, but you’re not throwing inventory at it. You’re freeing up working capital. Right. And and really freeing up dollars by only investing in the inventory to get you to that better service level.
[00:31:50] And real quick for folks who don’t know stock outs. Folks may be new to retail or new supply chain when the customer’s right to buy something back to the phones and. Yeah. And in that moment. Right. To make that transaction. And there’s no immature. That’s right.
[00:32:05] Oh, there’s no inventory immediately available right now that there’s more expectation for immediacy and availability and maybe it maybe inventory singing another location. It has to be at that.
[00:32:16] And you lose that sale. Yes, you lose it, you know, or or you spend a lot to fulfill it. You mean if somebody wants it delivered in Atlanta and you only have it in Reno, you can still fulfill demand, but lose. It’s going on the Oscars. It’s going to cost you out the ying yang to do it. And companies are doing that because the expectation of the customer is so high for fulfillment. They will do that and that becomes very costly. And you know what? Blue Ridge does is creates an economic analysis that says it’s too expensive to fulfill from there. This is the fill rate or service level or customer experience that you’re trying to reach at this location. And it can tell you how much to carry and to fulfill demand, standard demand. And just in case.
[00:33:01] And this is where your demand is, right? It can get that specific with it. Yeah. It helps you figure that out. As far as the fulfillment issues that Greg was just. All right.
[00:33:09] And we’re we’re really solving it from short term planning horizon and a long term planning.
[00:33:14] You know that the the short term, the traditional supply chain planning problem is as you work a demand forecast. You have to order from suppliers. And that means filling the container ship, container ship from China or now the container ship from somewhere else or the truck coming in the inbound truck. You got to fill the truck. You’ve got to order things you may not want to order. You’re filling within brackets. And so now it impacts your inventory. You’re putting money towards and working capital towards having that availability. Now, you know, based on that, price optimization fits well with that because you can use pricing to drive demand on items that you’re not overstocked on because it costs a lot to store something in a warehouse or store something even more so in a retail location. So that’s your 12 month horizon. But there’s a bigger horizon. What do you do three to five years down the road when sales thinks that certain customers are going to buy more or you’re really going to invest money in inventory to support that? And so there’s an S a._p sales and operations planning and this collaborative nature of working a longer term demand forecast problem. And that’s where you can actually use tools now to reach into your customers. And then downstream or upstream, I’m sorry, up into the suppliers to actually share that information. So those three are really working well together. Okay.
[00:34:39] That discussion you’re were having around around who gets involved in forecasting it with an S&P as sales and operations planning or in IBP, which is integrated business plan is sort of like sort of beyond the four walls. Yeah. Organization that allows everyone who has an input to get involved and ever kind of reconcile and consolidate a plan by rounds. A partner.
[00:35:01] Yeah. Yep. Yep. Okay. So improving forecast at the core is what Blue Ridge does. That’s right. Where do you spend your time as EVP product strategy? Where do you spend your time?
[00:35:14] Podcasts. Most podcast chat with Greg over a beer track. Isaiah board.
[00:35:22] It was if it was only that simple. No, it’s it’s meat with customers. You know, that’s ah, that’s core to what we do. And so now it’s just flying in from Chicago. Meeting with a customer yesterday. Great discussions because they’re providing a better forecast to them. And understanding their needs to get to that, to understand their processes. These short term supply chain planning processes, these S.A.G. processes. And really bringing their organization together, connecting them with suppliers is about what we do. And then I meet with a lot of prospects, companies that are interested in doing business with us to explain what our roadmap is, working on that roadmap and the team that’s executing on it. And then the big one lately has also been bringing this price optimization enterprise version to market and tying it into this Blue Ridge platform that we have.
[00:36:14] So as the non technologist may be even of the group, is it? Am I accurate saying that the Blue Ridge platform you use referenced there is a standard part of that that goes into each of your customers. And then based on all the differences from sector to sector and company company, is there a customer customization piece to the platform as well?
[00:36:34] So you it is it’s a cloud based solution, which is really the advantage we get really fast are a Y because we can deploy it very quickly and it’s configurable. So I where I don’t use the term customization as much as configure ability. Gotcha. So we’ll we’ll determine their roles and who in the organization should do what we can figure it. And then we wrap things around getting this better demand forecast. How do your planners work? How do they plan and build these orders? How does your pricing team work and how do they get integrated with that?
[00:37:08] I think that’s a really important part of the architecture of Blue Ridge, is that it’s highly it’s as configurable as any solution is customizable. But the difference with configure ability is it remains supportable. You don’t wind up where Will is the only person on the planet who has that chunk of code that does that. Right. Right. And I think that the architecture that has been built at Blue Ridge allows us, you guys, to I still go to the board meeting so I can say, well, together. Yeah. It allow it allows the application to be highly configurable. Right. To whether what your role is, what your industry is, what your company goals are. And those sorts of things are equal to the customer, the the customization. But also 100 percent supportable and easily switchable. Okay. So then I mean, look, this is something I believe about cloud applications in general. The reason that they are coming to prominence is they have literally unlimited processing power, literally. I mean, literally, literally not figured an unlimited processing power. And it’s cost effective because if you need a million servers for 30 seconds, you go get a million servers for 30 seconds and you scale back down. But the additional thing that a cloud application allows you to do is to build a lot of this configure ability using switches and dials, virtual switches and dial up and make it as configurable as any other solution is, but still supportable from a single code. That’s right.
[00:38:40] There’s a third piece to it as well that I think is becoming more and more important, which is its cloud based. So it’s it’s not just inside your four walls. It’s not on premise. And that means connectivity downstream, outside your four walls, down to your customer level. Kisha, I want to be able to forecast, you know, big customers are going to really influence your demand and understanding their inputs and their demand behaviors and then really important upstream to suppliers, you know, being able to integrate and give them a picture of what your forecast looks like so that they can plan around it because we already talked about volatility and on their supplier base, if you have to switch suppliers or their capacity constrained, you know, you may be capacity constrained, which is also an impact you got to consider. How are you impacted by labor, transportation, capacity limitations, warehouse capacity? What about your suppliers right now, if you can, connecting with them? They appreciate it.
[00:39:33] Absolutely makes everybody’s job easier. And you’re sharing information upstream, downstream, too, which always also helps.
[00:39:38] And you’re you’re translating the forecast into something that’s relevant for that for a supplier, because what you sell means nothing to your supplier, what you are, what you intend to order from them, what your supply plan is. And that is really your suppliers forecast. So it’s important that that translation is made accurately and affectively timely and then communicated externally. Love it. All right. So I wasn’t going to be objective.
[00:40:06] Let’s let’s let’s broaden back out and let’s let’s make it less fund are agnostic selves here. Let’s talk about the big industry in the global in the end, supply chain industry. So, Cliff, know, one of the questions we love to ask folks as you consume your news every day is your track and stories, developments, innovations, you name it, or or we talk about some of the issues and challenges that that organization leaders are faced with in the global business environment we’re in these days. What’s a trend or two or topic or two that you’re tracking more than others?
[00:40:38] All right. Now, volatility is. Sums it up in so many ways. Customer consumer sentiment is changing. Customer demand behaviors are changing as they have alternatives, competitive alternatives. In so many categories and new entrants in those categories.
[00:40:54] To give an example of what you just shared, their sentiments changing or they get different.
[00:40:59] When Amazon comes in and sells in an automotive parts category, it influences every one of our auto parts distributors and it’s usually the things that they may have relied on before for profitability, high margin items that are now being impacted. They’ve got to find that profit net revenue so that margins somewhere else. And then there’s volatility on the supplier side. You know, if it’s not domestic, certainly international. You know, there’s you know, we already talked at length about that and it’s it’s real. And it it never stops. The volatility is always there. And then there’s the labor shortages or capacity constraints. There’s transportation capacity strains. So that volatility, it really hits a distributor hard. They sit in the middle of the value chain. They’re not a retailer. They serve retailers. They may even be serving direct customers. And, you know, they’re not a manufacturer. They have to consider capacity constraints. But they’re it’s a negotiation with the supplier. And then and I’m a biased towards technology, certainly. And so I think one of the big trends in Supply chain planning is it’s no longer this this self-contained box that it’s traditionally been viewed in. It’s starting to expand out to other technology agreed demand sensing or optimization. Long term and short term optimization is being more closely tied to execution systems like warehouse management, transportation management. And you know, I certainly advocate for supply chain planning. Also having to consider promotion optimization, price optimization, promotion optimization.
[00:42:33] So we’re talking about how many sales they have in a in a season or a year or it even goes beyond that.
[00:42:40] Traditionally, for a distributor or retailer, they will promote the same item year after year, which is, you know, if anything, very easy to predict. But the true difficulty there is actually, you know, we know what promotions coming up. Maybe it’s what’s an item that you haven’t done a promotion on before and using science to look at the attributes that are shared and the lifts from other promotional activity that’s similar.
[00:43:05] And using that to forecast what the lift is, you know, so on Netflix, there’s a great or I’m sorry, Amazon Prime. There’s a great documentary called McMillian’s. Yeah. I think by the time this thing is public Liegghio too. Yeah. Sheer to this right about time this episode publishes PARNABY four or five, six episodes deep. But what’s interesting about that is it’s a documentary, right, about the Monopoly game in McDonald’s. And that Monopoly game drove so much business for McDonald’s that every time that sales dipped at that, they just cranking back their monopoly and even and when they couldn’t, they all wanted a monopoly come back because it drove so much traffic. And, you know, I grew most of it’s grew up. Yeah. Even if you didn’t play the game, you had those pieces on every cup or fridges I see in those commercials again. And yes, it is. And so to our listeners have yet seen that there’s also the whole documentary. McMillian’s is biz is not about promotion optimization, but it’s about a scam behind. So a couple of the million dollar winners evidently were either related or there it was some kind of scam going on to make sure those prizes when he’s go somewhere. But great documentary. And as you’re talking about, you know, driving traffic during those peak those dips in revenue or when folks are trying to drive traffic, you know that that monopoly was very reliable. Evidently back in the 80s and early 90s.
[00:44:30] And there’s, you know, all it’s not just promotions, it’s other events. You know, we we we were chatting about the Super Bowl. Yeah. Before we started.
[00:44:38] And that’s a bigger ones or one that was not a big deal again.
[00:44:42] Is that a big deal? Funny. Going to announce my bias so that that drives debate in certain markets.
[00:44:48] The Super Bowl itself drives demand. There were certain categories because the event shifts, the location shifts, and you can have weather events and many other events that. And when you look at those and understand the the influence on demand, it’s really moving to predictive analytics.
[00:45:05] Yeah, that’s that’s why the why is so important. The why of demand.
[00:45:10] And Cliff, wasn’t promotion, promotional planning a big part of the survey as well? As far as the wholesalers, what it was like growing in interestin. Right. That was that was something we kind of didn’t expect it, but continued to rise as well.
[00:45:22] That’s been very vexing in retail for decades, right? Right. And I think because distribution and wholesale is looking more like retail and the customer expectations are more like retail customer expectation. I think that’s going to become more and more prevalent. It is. And people can have. To that and we’ll see what. Twenty twenty one, says Ryder.
[00:45:42] Well, people have to make a choice between everyday pricing, everyday low pricing DLP and as high low, which is a dangerous DLP.
[00:45:53] That’s a pricey new acronym, Wal-Mart Invent that.
[00:45:56] I think they they drove it for sure. Yeah. They drove versus what you know has traditionally been a high low which is Sears and J.C. Penney and no at Bath and Beyond. So. Yeah. And so it’s it’s it’s a slippery slope when I start to rely on promotions to drive. We’ll wait for him.
[00:46:12] Right. I mean they will. You train your consumer to wait for those bright NDU basket. You’ve got to be very careful with that.
[00:46:21] Ok. So going back to the volatility. Right. It’s one of the things that you’re really we’re it. Been in a lot of time. And I think if you’re in Supply chain, Greg, you’re very volatile.
[00:46:32] What do we call him? An adjutant. He’s Patchett’s. Yes. All right.
[00:46:36] So anything else that doesn’t have to be a number two. But if there was. Is there anything else in the global business environment, your truck you pay more attention to than others right now?
[00:46:48] I the easy one. You know, especially looking at price and price optimization is an Amazon effect. It’s price transparency, not just from Amazon, but Granger is becoming a behemoth. And we found in other research that it’s a a world in distribution of have and have nots. Yes. And the haves are using technology. One of our key customers happens to be an HBC. But when we talk to them with our executive team, they clearly stated we sell widgets. It’s not about the widgets. It’s about the technology we bring to bear to manage that better from a demand forecasting and a pricing perspective. And they are on a tear through acquisitions. So they’re leveraging that and they’re they’re doing what you know. The survey also showed that people are distributors in particular, growing revenues. But margins and profits have flatlined and they’re struggling to find how you can get more profitability. This rise in revenue. That’s an example of one of our customers that solved it. And using that to consolidate in the market.
[00:47:52] Ok. Good stuff. Well, you know, as we start to wrap up our interview with Cliff Isaac in Blue Ridge, your Blue Ridge has been nominated for Supply chain Innovation of the Year for the 2020 Atlanta Supply chain Awards. So I know that you’ve got a big trophy shelf at Blue Ridge and the Atlanta Supply chain Awards may not be there, but it actually wasn’t being nominated. But clearly, as your continue to grow up, I’ve seen some acquisitions that Burrage has made here in the last year. So clearly you’re adding leadership being with. So it seems like you’re on quite a run here.
[00:48:27] We are a fourth year of of high growth and and growth before that, which has allowed the acquisition and allowed a considerable customer growth. And, you know, it’s it’s a cross. We’re really starting to see pockets of great visibility within industries, auto parts, furniture, food and beverage, wine and spirits. And because of that, that also lends itself to a cloud based platform because you learn from these different customers, thereby dealing with that volatility that you’re at last sector.
[00:49:01] I think, you know, the probably the biggest number that that that Blue Ridge has on there is that 98 percent customer satisfaction and customer retention. Hey, that is a pretty impressive number.
[00:49:12] And that’s important. Nice. So I ask ask about one other thing, and sometimes the thoughts come and go. Blueprint 2020 is coming up, right? Yes, sir. And that’s going to be in April. I want to say. Right. End of April. Yes. In the twenty sixth to twenty six. Twenty eight. Now, do you know you’ve got some great keynotes coming in the speakers. But Clift. Are you doing breakout sessions? What would we all do as a leadership team at that blueprint?
[00:49:40] So we have some mainstage, some speakers and we’ll talk about what is functionality and capabilities that have just been introduced and what’s coming on the roadmap. And then the breakout sessions, really. Now we have enough customers to really break it out into a management track. What are the strategies? What are the best practices to apply in essence, LP and Supply chain planning and pricing. And then we have a practicioners track, you know, that is core to our success in adoption and use. So we have deep dives into how do you actually solve some of these real, real world problems and even some collaboration. I mean, it’s also about customers getting together and sharing within their industry best practices.
[00:50:19] It’s important, you know, even in this digital technology driven age, sitting down with your peers, whether you’re leaders or practitioners or the doers or the you name it, sit down and compare and best practices and and talking about the unique ways that we’re all. Solving very common challenges is very powerful. Well, we’re going to add something.
[00:50:45] No, sir. Oh, it’s just my asking in your knowledge and. And a homespun always said homespun. That’s that’s a good. I like that. That that that resonates. I just liked it when he was talking about integrated business planning here. Like if guys invited his party. Yeah. He just put it in a little nuts. Yeah, that’s it. You nailed it. I thought I’d get lucky.
[00:51:06] So let us supply chain words. We’ll see how that breaks out. I think we’ve. Well, I know we’ve had about double the nominations we had in our first year. Twenty nineteen. So congrats to Blue Ridge that in fact the innovation of the year. Well I guess that was that was around that award categories around last year. But I think that probably has had the most nominees. Yeah. So you got some good competition there. But nevertheless it’s really neat to see what blue Segway. When is that event? Scott March. Great question. That’s a great question. Tuesday, March 10th, down at the World Congress Center, hosted by.
[00:51:42] There’s anything else going on.
[00:51:45] You are still still in my notes here. The largest supply chain trade show in the Western Hemisphere has been likes to put it like that. Ben Harris at the Metro Atlanta Chamber. Thirty five thousand people will be at the Georgia World Congress Center, all celebrating supply chain one shape or form. And on Tuesday, we’re gonna be celebrating the successes for companies that have roots here or operations here in metro Atlanta and have Ryder categories, including the Supply chain Innovation of the year category manufacturing, sourcing, transportation, you name it. And we have we’re gonna have around 100 nominees in year two vying for the yet to be designed trophy. We’ll see across 14 categories.
[00:52:26] We’re gonna make it look like the Super Bowl trophy.
[00:52:28] Yeah, make it look like the Lombardi trophy like that. Yes.
[00:52:32] All right. So, Cliff, we would be remiss if we did not make sure that our listeners knew how to connect with you and how to learn more about Blue Ridge and Blueprint 2020 as a public is open to a public or flaum longer pay some my public.
[00:52:47] Yeah, it’s kind of Ryder only to ask around, you know, if you’re a supply chain professional, you. I’m sure you will be. Well. Well, get in touch. Yeah.
[00:52:55] So how can folks learn more? How can they connect with you and learn more about Blue Ridge?
[00:52:59] Absolutely. Cliff Isaacson at Blue Ridge Global dot com or our Web site, Blue Ridge Global dot com is a great way to start. Plenty of good content out.
[00:53:09] And you can find that wholesale 20:20 wholesale report right there on the home page as well.
[00:53:13] Perfect. Perfect. Good stuff. Okay. Well, Cliff Isaacson with Blue Ridge. Thanks so much for your time today. We’ll keep our fingers crossed that everything flows nicely into production. Always a pleasure. We met the first time at Blueprint last year and really enjoyed our twenty five minute interview. And I’m glad we had a chance to get you back and learn more about the story, because we didn’t have time in that first interview to get to uncover where you’re from. You know, the u.p and the submarine and submarine early. Yeah. Yeah. So good to have you back. It’s great to be in. Greg and Will, we’re going to offer up our streamlined conclusion today. Okay. So we’ve got a variety of events beyond that. Linda Supply chain awards, right? Vince, with the Association for Manufacturing Excellence. Yeah, the Automotive Industry Action Group CFT by Reuters events. We just finalized the Chicago event there. Where can they go to learn more?
[00:54:10] Supply Chain Now Radio dot com and go to the advance the events page, not advance the events. Yes. Yes.
[00:54:18] And perhaps by the time this publishes, we’ll have a webinar in conjunction with Resilience 360 follow up on those 10 items. Yep, absolutely. And then who knows what the research will show, honestly, however long this continues to get.
[00:54:33] Quick thing on that. Sorry. They did a Reunion’s 360, did a podcast. I did about was it two Fridays ago and it was two Fridays. Anyway, they did a podcast. Yeah. About is rhinovirus and potential impacts. So we have put that in the show notes as well as the thirty first.
[00:54:52] That was Mirco. And Tim you get or you go here.
[00:54:55] I was calling in from Germany and Tim was calling from Singapore. It was one of our most global episodes we’ve done so far. Yeah. Yeah. Right. Loved it. And it’s very well received by the way. So folks are just they can’t get enough about the coronavirus or still timely. It is very timely. And whether in Supply chain or or, you know, you’re dealing with it directly through it in a different industry. We hope certainly about time that in the weeks ahead that we’ve got a bigger grasp. It seems like we’ve had some early signals that containment is starting to set in. I hope those are they will stick. Right. Because you don’t know if they’re real, right? Yeah. You put it more bluntly that. Yeah. I’ll just say it. But nevertheless. So check out any of the events. Leading up, coming webinars and in-person events own the events TAB Supply Chain Now Radio ICOM. On that note, big thanks again to our featured guest here today, Cliff Isaacson, E.S.P. Product Strategy, Blue Ridge. Thanks to my co-hosts Greg White.
[00:55:55] And we’ll hear way adj. evangelist’s. There you go. As you said, evangelist’s in the submarine quere. Quentin Tarantino’s got a plot for. It’s a Tarantino movie. All right.
[00:56:09] So to our audience, be sure to check out other upcoming events, replays of our interviews, other resources at Supply Chain Now Radio RT.com. Find us wherever you get your podcast from, including Apple podcast, SoundCloud, Spotify, YouTube. Be sure to subscribe so you don’t. Missing thing behalf of the entire team here. We’ll see you next time on supply chain. EFT. Thanks everybody.
EVP Product Strategy of Blue Ridge, Cliff Isaacson, is an experienced entrepreneur, strategist, product manager and CTO, including over 20 years in various leadership roles at software growth companies. Cliff joined Blue Ridge with the acquisition of the price optimization company he founded. He has engineering degrees from Northwestern University and Carnegie Mellon University. He started his career as a nuclear submarine officer.
Will Haraway is Founder & Lead Evangelist at Backbeat Marketing. Will has 20 years of executive experience in B2B Technology Marketing. Will is a certified analyst relations practitioner by the Knowledge Capital Group and has helped companies including Manhattan Associates, Aptos, Atlantix Global Systems, American Software and Rubicon Global improve their brand reputations with marketing results that help increase sales. Will also serves as a member of the APICS Atlanta Executive Advisory Board. The Backbeat team includes lead generation, digital marketing, media relations and content marketing specialists with a combined 50 years of experience in their chosen disciplines. Learn more about Backbeat Marketing here: www.backbeatmarketing.com
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