Supply Chain Now Episode 443
“I joined Coca-Cola in 1991, right at the time when the wall fell in East Germany. One of the things we did was to actually go to Berlin and hand out free Cokes at the wall. It was such a powerful experience to be there in Germany at the time the whole country was so excited about the change. To be there handing out Coke, you could just feel the power of the energy that was going on at the time.”
Scott Armstrong, CFO for CONA Services LLC
To outsiders, Coca-Cola seems like one large company, but it is actually made up of a number of different organizations and business units, some of which function independently and some of which have either been kept in house or pulled back in house after being external. Coca Cola Enterprises, the major bottler for Coca-Cola is a prime example; they were brought internal in 2010, reformatted, and then spun back off. This blend of internal and external operations creates significant challenges for Coca-Cola’s IT operation.
Scott Armstrong is the CFO for CONA Services LLC, the IT Shared Services Provider for Coca-Cola’s North American Bottling System. His organization provides IT services to the 12 largest U.S. bottlers and essentially runs their IT operations on a day to day basis. They are responsible for designing new systems: the build as well as deployment and operations.
In this conversation, Scott explains to Supply Chain Now Co-hosts Greg White and Scott Luton:
· How CONA is investing in a blockchain initiative that will automate the ordering process between CONA and non-CONA bottlers working for Coca-Cola without requiring their systems to interface directly
· Why managing out of stocks at retail locations is one of their primary concerns
· The fact that we never know what is going to happen to us tomorrow, and knowledge of that fact should shape all of our personal and professional decisions in life
Intro – Amanda Luton (00:05):
It’s time for supply chain. Now broadcasting live from the supply chain capital of the country. Atlanta, Georgia heard around the world. Supply chain. Now spotlights the best in all things. Supply chain, the people, the technologies, the best practices and the critical issues of the day. And now here are your hosts.
Scott Luton (00:28):
Hey, good afternoon. Scott Lee, Greg white, and Paul Noble with you here at supply chain. Now welcome to today’s show today’s episode, uh, all focused on perspective from the C suite. In fact, we’re getting POV from the CFO. So stay tuned as we look to work hard to increase your supply chain, Accu Greg white. You liked that? Huh? Let’s get started PDQ with a CFO and get his POV. Oh, even better. Always one up by Greg Wyatt. Great to have you back. And, Oh, it’s great to be here. Great to have Paul here. So welcome. We were talking pre-show. It’s great to have Paul back as kind of a guest cohost. We were both in Arizona together, uh, before Modocs had a blast, gorgeous weather, great conversations. And Paul, great to have you back. Yeah, no, it was a lifetime ago. It seems, but we’re going to be back and, uh, glad to meet Scott.
Scott Luton (01:27):
Well, just prior to bringing on you, you almost let the cat out of the bag just prior to bringing on our featured guests, Paul, you know, you’ve been doing some big things since your last cohost when you’re not having fun with us meeting more intrigued, the most intriguing people across global supply chain. You’re leading the team over at verus and y’all been pretty busy, huh? Yeah. Things have been, uh, you know, different transitioning as everyone has to, uh, to remote work. Um, it’s been, uh, it’s helped us, helped us grow and control, uh, handle what has been, uh, a significant amount of inbound demand as supply chains are changing quickly. And, um, our ability to smooth support that remotely is, uh, kept us very busy. So we’ve been adding to the team and, um, looking ahead for some strong growth to finish out the year and, and beyond.
Scott Luton (02:22):
So truly blessed. And, uh, I look forward to what lies ahead. Outstanding. Well, great. How you back here? Um, quick programming it to our listeners. If you enjoyed today’s episode, be sure to find us and subscribe wherever you get your podcasts from. We try to keep up with the global industry we publish every day. So, uh, and, and cover a different sector, different points of views every day. So check us out wherever at splotch and now where we get your podcasts from. Alright, no further ado. We’ve got a great guest here today. Scott Armstrong, chief financial officer with Coke, one North America, AKA Cona, LLC. Scott. Good afternoon.
Scott Armstrong (03:02):
Can I have new Scott? Thank you for having me on today. Appreciate it. Yeah.
Scott Luton (03:05):
Welcome. Welcome, welcome. Welcome. We really enjoyed the warmup conversations. Uh, you’re a friend w now we’re friends, but you’re all. We also have a common friend, uh, bill and bill Huber. Who’s who, um, has been a great dear friend of the show for so long. So great to have you here and looking forward to learn more about your story.
Scott Armstrong (03:24):
Thank you. Let’s get started. All right,
Scott Luton (03:27):
So we’re going to get started with the train dollar question, Greg. So Scott, tell, tell us about yourself and tell us a little bit about where you’re from and give us the goods on your upbringing a little bit.
Scott Armstrong (03:39):
Yeah. I grew up in middle Tennessee, a middle class family, uh, really focused on, uh, work school, academics and sports, you know, typical middle class America. Uh, I decided when I turned 18 to go to military college, which is a little bit different path than most people take. And, uh, so I applied to VMI Virginia military Institute, which is based out of Lexington, Virginia, and I got accepted and, uh, decided I wanted to try and commission as a Lieutenant in the army. So that was my, my, my goal at that time.
Scott Luton (04:13):
What did your folks think? Cause as you, as you mentioned, that’s going to military school is not the path of majority. Were they all for it?
Scott Armstrong (04:22):
And now they were floored pretty much. They didn’t want me to go, but you know, they supported me if that’s what I wanted to do. Uh, uh, my other job
Scott Luton (04:31):
As you speak today, right? I mean, you see some of the commercials about joining the military and mom or dad is usually, I’m not sure how I feel about it, but I want you to do what you want to do, right?
Scott Armstrong (04:41):
Yeah. Well, my other option was go to Vanderbilt and do the typical Southern college experience, but I really wanted something a little bit more challenging mentally and physically. And that’s, that’s what being my opera at the time.
Scott Luton (04:54):
Talk about that kinds of as a next step, we’re gonna get into your professional journey here momentarily, but, or some key learnings.
Scott Armstrong (05:01):
Oh, BMI is a very unique place. It’s been around over 180 years. It’s the oldest state supported military school in the country. And really, I learned three key things at BMI. I think a key life lessons that really provided the basis for my adulthood. One is perseverance. Uh, the first year there you’re, you’re called a rat and you’re basically all treated the same. You’re all your privileges are taken away and you really have to start from ground zero. You know, they shaved your hair and basically starting from nothing. And basically you build that bond with your teammates, your classmates, you build that camaraderie. It’s really, really, uh, really, uh, something special, uh, that brotherhood that you have. The second thing was really around humility. Again, you learn a lesson there, BMI, you can’t do everything perfectly. You need help. Then you have to learn to accept help. And a lot of people have an issue trying to accept help sometimes, but you really have to understand that you can’t do everything so you will need help. And the last thing was around servant leadership. I think BMI teaches you to lead from the front and, uh, that’s basically, uh, you gotta pay attention to detail
Scott Luton (06:06):
Universal lessons, uh, all three of those that you could apply to just about any part of your journey. Yep. Um, alright. So before we move forward into that next step, kind of what came after VMI, I want to go back cause I missed a important tidbit. Yeah. Cause you’re you said middle Tennessee. You’re from Lebanon, Tennessee. And let’s see if Greg had Paul prepped what famous iconic American restaurant is based in Lebanon, Tennessee.
Scott Armstrong (06:38):
I think we stopped them. Yeah.
Scott Luton (06:40):
Cracker barrel. Yes. Wow. A base right there in Lebanon. That’s pretty neat. Uh, Scott, probably people outside of the country that know that Smith is a world famous restaurant.
Scott Armstrong (06:53):
Yeah. And unfortunately we didn’t buy any stock in, in 1972 less.
Scott Luton (06:58):
That’s right. Oh, play the lessons learned. All right. So Scott, um, one last thing. What, what followed BMI? You had some, you had some pretty incredible educational opportunities that followed your time at VMI. I believe.
Scott Armstrong (07:11):
Yeah. So at BMI, I originally wanted to try it to be a Lieutenant and commission in the army, but I had a medical condition that would not allow me to do that. So I changed your course in my career. Halfway through BMI changed international business, uh, changed my major and uh, focused on building a career in international business, focused on Germany and accounting. So at that point I applied and got accepted to Thunderbird, which is a graduate school in Phoenix, uh, which, uh, at the time was one of the top couple of schools for international MBAs at the time in the eighties, still a wonderful school. So I packed up my bags, drove cross country and uh, start a new life in Phoenix
Scott Luton (07:53):
On that cross country trip. I know it’s a little while back. Um, I’ve made some similar journeys. My lifetime. Was there one memory or town you stopped in or experience you had on the trip out?
Scott Armstrong (08:05):
Yeah. Just how big Texas is. It takes forever to cross Texas. I’ll tell you guys. It is true.
Scott Luton (08:11):
So I actually, when I graduated from college, Scott, I only lived in Kansas. Yeah. And just, just crossing the panhandle of Texas seems like forever. Right. It is a massive, massive state. That is right. Absolutely. Absolutely. All right. So, uh, I think now we’re kind of segwaying, uh, as you Rachael jazz wrapped up your MBA, you had a big adventure. So Paul let’s dive into kind of what was next.
Scott Armstrong (08:37):
Yeah. So yeah, go to Phoenix and
Scott Luton (08:43):
Start your professional journey. Walk us through that, you know, that upbringing, that process and what led you to where you’re at today? Well, you know, that first job
Scott Armstrong (08:56):
Out of college is always a critical one in your formation for what you do. And I was, I was blessed to, uh, be recruited by a company that was an internal audit company. So for a finance guy, internal audit is a great starting ground to learn how companies work. And so that company hired me as an intern while I was at Thunderbird. And then they hired me after school, uh, full time. Then I moved to Germany after that with them.
Greg White (09:19):
Yeah. And then of those of those roles, as you continue to carve out your professional journey, um, what moment was it that you knew that’s what you wanted to do that Eureka moment that, uh, really continued to drive you?
Scott Armstrong (09:37):
Well, I think one of the first jobs I had with Coca Cola and I joined Coco in 1991, it’s right at the time when the wall fell in East Germany. And, uh, one of the things we did was actually go to Berlin and hand out free Cokes at the wall. And it was just such a powerful experience to be there in Germany at the time the whole country was just so excited to the change and to be there handing out Coke, you could just feel the power of the energy that was going on at the time. Wow. Yeah.
Greg White (10:08):
Did, did you get any, I mean, did you, do you have pictures that you took?
Scott Armstrong (10:12):
I did it, I got a piece of the wall. Wow.
Greg White (10:14):
Would you really? Wow, that’s impressive. Did you ever go to East Germany before the wall came down while you were there?
Scott Armstrong (10:21):
I did my junior year at BMI. We sent a group to Russia into East Germany, uh, on a study program. So I got to go then not at the time had watchtowers machine guns, guards, the whole thing. It was, it was real. And then just to be there and then when it all came down, it was just amazing. Just a great story.
Greg White (10:39):
It was the middle eighties, correct? Scott?
Scott Armstrong (10:43):
Yes. 1989. Yep.
Greg White (10:44):
Okay. So right when the Soviet union fell, right, exactly. Yeah. Yeah. Did you sneak any, uh, any Levi’s five Oh ones into this union because that was good money back then?
Scott Armstrong (10:55):
No, but I did have a couple of CDs that were at work stairs. Yeah, exactly. Yeah.
Greg White (11:01):
Scott, the other thing about East Germany, is it, it kind of interwove with your professional journey? Tell us about your time with, I believe East German bottlers, right?
Scott Armstrong (11:12):
Yeah. So, uh, when the wall fell, Coca-Cola invested $500 million to purchase all the East German bottling companies that were former communists soft drink companies. We purchased the, you know, all the assets that they had and we just went in and built a business from ground zero. Basically they had to replace everything, all the production, all the manufacturing, supply chain, everything had to be built new. And so, uh, along with that investment, they needed an internal audit director to manage some of the controls around all that money. So they sent me over there and I got to work for three years. They, with all, uh, former East German people, it was this great experience. That’s
Greg White (11:54):
Really impressive. So you had to pay everything that was formerly gray red in the factory.
Scott Armstrong (12:00):
You know, that those guys, they just didn’t have a sense for, you know, double entry accounting or, or, you know, internal controls. All those things were, were not really in their day to day work.
Greg White (12:12):
Well, it didn’t matter. Right. They got paid either way and they got paid a pittance. So I mean, just really the quality didn’t really matter in it. And it’s interesting because I was there before and worked in Germany after, and to see the juxtaposition of the two Germanys was, was fascinating. Right. I mean one, so still so industrious and the other one needing to become, so again wow.
Scott Armstrong (12:41):
And they spend 20 years investing in the infrastructure to get it back up to the level that it needed.
Greg White (12:46):
Yeah. Very impressive. So, so that’s, while you were at Coca-Cola corporate rights, so tell us, how did you land at Kona and tell us a little bit about what Kona is and how it fits into the whole ecosystem at Coke. Yeah.
Scott Armstrong (13:03):
Well, I moved back to the U S in 96 from the time for the Atlanta Olympics. And at that time I started a progression of different career positions within Coca-Cola eventually ended up with Cona services. So part of what was happening in North America about six, seven years ago is that, uh, Coca-Cola purchased Coca-Cola enterprises. And, uh, as part of their system of the future work that we were doing, they wanted to refranchising North America. And so they took CCE, which turned into Coco refreshments, and then we refranchising into new or existing bottlers. And as part of that transformation, they had to have an it platform that could support all of that because you’re talking about doubling and tripling growth in the span of a couple of years, right? Let’s say some of these
Greg White (13:51):
For listeners that may not be completely familiar with the structure Coca-Cola enterprises was the bottling division, correct.
Scott Armstrong (13:58):
It was an independent company. It was the largest us bottler. Uh, it was about 80% of the U S which Coca Cola re uh, purchased back about 2010, brought it back into the house and then re formatted it and sold it to anabolic.
Greg White (14:16):
Right. Cause they, that had been, that had been, um, part of the organization franchise, then part of the organization then franchised out again. And this is kind of the third, I don’t know the history completely, but it’s third or so iteration of that, correct. Right over the last 30 years. Yeah. Right, right. Before, before we move into Kona, I want to go to something that came up in our, in our, some of our appreciate conversation, Scott. And when you were still in Germany and you’re leading these, these global initiatives, you developed a really appreciation for what,
Scott Armstrong (14:52):
What are the cultural differences across countries, as well as the role that it plays in your finance career? Right? So it’s your traditional finance training and an MBA school. Doesn’t teach a lot about systems. And of course maybe that’s changed over the last 30 years, but when I was there, uh, not a lot on systems and how systems impact finance roles. And so what you see here is a gradual progression over time is that it now plays a major role in finance and your career in finance. So I’ve seen that in a lot of different countries,
Greg White (15:24):
Bridging those cultural differences were a critical component of moving.
Scott Armstrong (15:31):
Yeah, you have to know every country you go into it’s a different, uh, style, uh, works better than others. You know, uh, had a lot of great experiences in the Philippines, China and Germany, totally different cultures. And to be successful in those countries, you have to approach it different ways. You have to be flexible.
Greg White (15:49):
One question, Greg, sorry. I know we’re getting the way that the Kona aspect, but yeah. I mean, may just give it, sorry. I interrupted first Scott, so it’s okay. Um, give us an idea of, of Kona and how it plays into the ecosystem and then an idea of what your role there is since CCE.
Scott Armstrong (16:09):
Yeah. So my current role is as chief financial officer for Kona, and I’ve been there since 2016, we basically started Kona from scratch. We created an it services company, uh, to support the U S bottling system in Canada. And, uh, basically we provide it services to the 12 largest U S bottlers and we run basically their, their it operations on a day to day basis. So we’re responsible for design of new systems, the build as well as deployment and operations of all the it systems.
Greg White (16:40):
So I know what a CFO and I bet a lot of people know what a CFO does by title or by typical role. But is there anything unique about your role because of, of the way that the company is organized or how it fits into the Coke environment that is unique?
Scott Armstrong (16:57):
It is, well, we have 12 owners, 12 bosses. So I spend a lot of time on managing the board, uh, relationships and making sure that they’re all informed on different financial matters. So it’s a, it’s a very, uh, intricate board structure that we have the 12 owners.
Greg White (17:14):
Yeah. So you’re really an outside, if you want to think of it that way outside CFO’s as much as inside, correct?
Scott Armstrong (17:21):
Yeah, yeah, yeah. I mean, no one owns a majority. Uh, everyone has a minority interest in this stuff, but 12 owners in total,
Greg White (17:30):
That’s a big board. It is a big board. I know Paul, I know that officially you are a cohost on today’s show, but something that Scott has said anything I know you’re not, you’re certainly familiar with leading big initiatives. Is anything, one thing that Scott has shared so far really stick out to you? Yeah. I think the, uh, the interesting thing that a of people don’t think about is, you know, the common thread between it and finance and the challenges in trying to overarch different organizations, but more importantly, different cultures. And you know, that the global language of supply chain, um, you know, has a lot of different, uh, aspects to it. And obviously technology plays an evermore important role, um, today than it ever has. And so, you know, having those two tied together doesn’t seem like the logical thread, but is certainly a very important driver of that.
Greg White (18:33):
Yes, we’ll put the language of global supply chain. I love, I love that Paul, and it really is interesting how often, um, I mean, of course you talk finance all the time when you’re in tech, because in the old days it was a huge capital expenditure. Now it’s a huge expense for the most part. Right. And it’s ongoing. So you have to have a sustainable business case for technology these days, rather than just that kind of one hit wonder where you had to convince Scott, it’s worth $500,000 to do this. Instead you have to convince Scott it’s worth a thousand dollars or a hundred thousand dollars a year to do this forever. Right. And, and, and build a really solid business case for those kinds of technologies. I’ve watched that evolution. And I know Paul, you have to watch that evolution occur and I’m sure Scott, you’ve been a huge part of that kind of thing.
Scott Armstrong (19:33):
Yeah, for sure. I mean, we, uh, every couple of years we’ll look at our platforms and potentially changing those based on technology and what’s happening in the market. Uh, but, uh, for sure the business case has become much more elaborate, detailed, uh, again, an intersection of finance and it, that able to explain that the value you’re getting out of it systems yeah.
Greg White (19:55):
As a, as an, as a tech guy, this is, this is an off script question, Scott, but I’m curious about this. Um, so I promise it’s not a gotcha, but one of the things that, one of the arguments that is made around cloud technology is that because instead of the big hit and then 20% maintenance every year or whatever it is, you get from regular tech and they usually pocket that in support or upgrade or, or, uh, maintenance, right. Instead, the theory is that you pay a little bit every year for much, you know, for every bit as long, but you get more incremental, more enhancement, more substantial enhancement of the product, along with the support over the years. Have you found that to be the case for the most part, uh, you we’ve had mixed
Scott Armstrong (20:48):
Results of that. Uh, we are just about every area of Kona. We’re looking at moving to the cloud where it makes sense. I don’t, I don’t think it makes sense in every case, it, depending on the business area. So you just can’t assume it, like, it’s just not a given. Yeah.
Greg White (21:04):
Is there one that jumps out at you that doesn’t make sense? I’m just curious.
Scott Armstrong (21:08):
Uh, well, right now we’re looking at the infrastructure and how that works infrastructure as a service. Yeah. That’s one of the, one of the areas,
Greg White (21:17):
You know, one thing I’ve seen again, sorry to take us so far off topic, but this, I think this will hopefully be interesting to folks. One thing I’ve seen is companies, their ERP investment often on premise, and what they’re doing is layering cloud technologies over the top of that, rather than trying to bring that whole technology to the cloud. Is that, I mean, again, you, you would only have the Coke experience, but have you seen that or have you guys contemplated that?
Scott Armstrong (21:48):
Yeah. I mean, we’re, again, SAP is our core ERP system, but we’re building best-in-class apps on top of that, where it makes sense. It’s not all SAP, right. So it’s a, it’s diversifying, let’s put it that way. It depends on the fins on the area of supply chain, uh, customer facing all of those, you know, we’ve looked at different applications to help us.
Greg White (22:09):
Yeah. That that’s, that seems like a common thread among companies is to kind of not muck with the core infrastructure. Right. Because it’s grooved, it’s been grouped for decades in some cases, but then to go deeper with some of those, those niche functionalities. Okay. Thank you for indulging me there a little bit. Tell us a little bit about some of, some of those are other changes that you and the team are, are driving at Kona.
Scott Armstrong (22:38):
Yeah. So we, uh, we have an innovation team at Kona. You know, what we try to do is add value for our bottlers, right? So one of the things we’re doing and, uh, got a little bit to our conversation a couple of minutes ago about optimizing the investment that you have. So one of the things we do is a thing called value optimization, where we send out teams of experts to look at how they’re using the system that we built. And majority of the time, they’re not using everything that we built in the right way. So we send in a team look at where it’s warehouse or whatever they’re doing and say, look, you need to be using X, Y, and Z instead of a, B and C in the right way. And making sure they’re doing the process. So we call it value optimization, and we saved the Butler several million dollars just by doing that, just using what we’ve done. Right. That’s what, that’s one thing we’re doing.
Greg White (23:29):
So that, I mean, that’s where your sort of foundational audit skills come in really, really handy, I would think right. Is,
Scott Armstrong (23:36):
Yeah. I mean, w we worked for the bottler, so again, we’re not really auditing them, but we’re running diagnostics and reports to see how they’re using the system. And we’ll just see that. Okay.
Greg White (23:48):
I can see where that, I mean, that intersection is really, really important for them to help them find efficiencies. Right. It’s a whole different kind of thing.
Scott Armstrong (23:56):
Yeah. We have, we have 80,000 users in the U S so not everyone’s using it to the depth that they probably could. Yeah.
Greg White (24:03):
And you talked about that, you talked about some implement certain things better than others. Some, you know, some of them are, maybe I would imagine more advanced in other areas than, than some of their cohort, but tell us a little bit about how you have driven that intersection. I think we used the term before of it and finance to really help these bottlers to perform better.
Scott Armstrong (24:29):
I’ll go back to our, um, one of the things we’re working on now is a thing called VIN prime. So it’s to help space to sales optimization in our vending machines. And it’s also to, uh, monitor the amount of visits we get from a service person and technicians. So we built an app that basically predicts, uh, what’s the right product. What’s the day’s optimal supply that we need in the machines for each brand or each product in the machine. And we basically built that internally, uh, in house. And we’re rolling that out to all of our Bowers, right? So that’s part of their investment. They get from Kona that innovation and where we’re driving value, uh, lowering their cost per case, which is their key metrics.
Greg White (25:11):
That’s valuable stuff. Cause that, you know, if I’ve seen anything in it and actually, gosh, it was, it was a few years ago. I think it was before the organization was called Kona. I worked with somebody at Coke who had a very, very similar initiative. And it was a struggle because a lot of the legacy, not, not, I don’t know if it was as much a struggle as it for Coca Cola, as it was, Coca-Cola struggling against the established system, for instance, the way that bottled or canned that’s the same concept, right. Product winds up in the store or the way that inventories are evaluated to determine what needs to be in a store or in a vending machine. They’re not dissimilar. And they are fairly archaic because of the infrastructure that you’re you’re selling into. Right,
Scott Armstrong (26:02):
Right, right. And you gotta remember each bottle had their own its platform and system with different data standards and technology levels. Uh, which is why, when Koeneke, when they did this refranchising, they needed an it platform that was sophisticated and could take them to the next level. And that’s what we did. So we, we rolled that out to each of these bottlers as they got new territory. It’s a five year process.
Greg White (26:27):
Yeah. Well, five years is nothing in Koch terms. I mean, think about it, right. I mean, it probably hurts. Scott hurts you a whole lot, Scott, but in the grand scheme of things, five years is not, not that broad of a, of a horizon. So,
Scott Luton (26:44):
So at this next, uh, big project, we’re going to be able to talk about blockchain, not in a lip service, uh, supply chain conversation required way, which has been the case for a couple of years. We’re going to talk about it in a really meaningful, powerful way, Scott. So tell us more about how you’re leveraging that.
Scott Armstrong (27:02):
Yeah. So again, our innovation team is working on a blockchain initiative. We’ve been working on this now for 18 months. And basically the use case was we have a Kona bottler Ancona selling product to a non Kona bottler. So the different it platform. So the situation was there would be, they would call in on the telephone, make an order. They delivered to this other bottler, but disparate systems wouldn’t talk to each other. And there was usually issues around what was on the truck, what got delivered, what that order, all of those things that go with that process. So, uh, we, uh, did an initiative of proof of concept around blockchain, where we linked up the independent Byler with the Kona bottler in a network that we, uh, basically automated that process, the ordering process. So now they can order and saddle and pay and all those things through the blockchain that we built. And that’s, uh, added a lot of value because it’s driven out out of stocks, driven out the wrong inventory, all of those things, manual processes and yeah, exactly. All of that. Yeah, exactly. Yeah.
Scott Luton (28:12):
Because I mean a lot of the independent bottlers they’re family owned businesses. I mean, they’ve been in these families in some cases for a hundred years.
Scott Armstrong (28:20):
Right. And most of them are not on an ERP, so they’re on a smaller version of something. Right. But they wouldn’t talk to our SAP. So that’s where we had to build something to connect it to. Right.
Scott Luton (28:31):
Paul, you’re going to say something a second ago just saying that, you know, blockchain in essence is distributed trust and, and I’m sure that helps between a sophisticated and unsophisticated systems. So well that, and I mean, and the independent bottlers have a fairly different business model in a lot of cases than the Cona bottlers as well. Right. So it does kind of create that trust where you’re, I imagine connecting a highly systematized, highly automated organization to one that’s much, much more manual, um, and even with probably substantially different business goals.
Scott Armstrong (29:13):
So we did that last year on a private, uh, network. And next year, we’re going to try a proof of concept on a public network. See how that works.
Scott Luton (29:20):
The innovation what’s interesting here. I know we were just talking about a couple of different examples, but, uh, Scott, as we are chatting a couple weeks back, uh, your organization Kona was, was recognized for its supply chain innovation at the Atlanta supply chain awards. Again, back before the world changed, uh, in, in early March here, at least in the States, right? Cause we all had different timeframes, uh, and that’s, what’s kind of cool on these shows. Verisign was also a Paul, if you remember, cause you were also there got recognized for supply chain excellence. So yeah,
Scott Armstrong (29:53):
I think that was my last live event. I went to
Scott Luton (29:57):
Those days, I losing those memories. I can’t wait to take some steps back in that direction, but, uh, but so Scott, again, what the culture that, that really makes it, that that allows innovation to thrive and encourages it in a real meaningful way, not innovation, the cliche that everyone throws around, but where the rubber meets the road and innovation really drives meaningful practical.
Scott Armstrong (30:23):
Scott Luton (30:24):
Allows that to happen at Kona?
Scott Armstrong (30:27):
Well, it’s a great network in relationships we have with our bottlers. And so we have an innovation council that’s run by our chief innovation officer. And the process we set up with them is, you know, we’re inclusive getting ideas from them, listening to our customers and basically taking that and trying to come up with ideas to make them more efficient and a lot of, a lot of things out there on the table. And, uh, but I think we have a pretty good process of how that innovation ideas get into the pipeline and prioritized
Scott Luton (30:59):
You’re you, you are an, an it infrastructure for businesses whose primary business, isn’t it. And because you come from finance and you’ve, as we talked about, you’ve met at that intersection of it and finance, is there anything that jumps out at you that really makes the magic happen really makes an organization more effective by leveraging the confluence of it and finance or,
Scott Armstrong (31:31):
Yeah, for sure. I mean, if you don’t, don’t control your costs for these major it platforms, they can really get out of hand quickly. And you’ve seen this hundreds of times with major initiatives that go over budget and then everyone loses competence in that team. And it’s just very difficult because when you’re talking about hundreds of consultants and software licenses, all the things that go into it, uh, we’ve been very proud of the fact that we managed cost under budget for the last five years. So we, we have a pretty good controls in place. We have good relationships with our board and I think they trust us. And that’s, that’s really where it starts.
Scott Luton (32:08):
I mean, that is a really great statement. You made me flash back to 2001 when I stepped into another fortune 500 company and they told me they were in the seventh year of their three year quote unquote ERP implementation, not to name any names. Um, and that’s not uncommon. And, and it did take, uh, even at that point it took a significant amount of effort to corral that thing in and sort of wrangle it into a reasonable and deliverable, um, methodology in it.
Scott Armstrong (32:40):
And it used to be, you had to fight every year for the capital for it, but I think things are changing. Like you said, we’re moving to more of an OPEX based model. So just gotta make sure that’s included in your planning process right
Paul Noble (32:51):
Before we kind of take a right turn and kind of go more broadly with the conversation pot, you know, a lot of, a lot of stuff you do when it comes to innovation and change management and the leadership behind that. What’s a, what’s a key lesson learned in your experience, Paul? Um, just one.
Scott Armstrong (33:10):
Paul Noble (33:13):
Um, no, I think as, as you talk about the shift from project base CapEx type investments made from a technology perspective, the way that supply chains are moving, um, and the speed, and then, you know, obviously with what we’re going through now, changing, you know, the historical nature of planning, um, across technology and organization, you see the need for technology to be supporting and being and breathing efforts right outside of, you know, your project, uh, project based plan because you know, what, what typically might take two to three years traditionally, you know, that solution may not be as sustainable or feasible for an organization. You know, we see that all the time speed to value and the impact on driving business value back to the stakeholders, the owners and your case, Scott, um, is pivotal. And, um, we’re seeing more and more technologies across every node in the supply chain, um, that are driving that thesis including ourselves. But, um, and, and it’s going to be more and more of a requirement, uh, for scalability issues in my opinion. Outstanding. Love that. What, alright, so, um, before we move on one final question for you, Scott, and Paul’s going to lead us into this next segment, uh, when you look back at, at the VIN prom and the blockchain initiatives, I know you have plenty of others, any, any, you know, last one big thing that, um, you know, helps really again, get these changes and these change initiatives to stick.
Scott Armstrong (35:00):
Yeah. I think, uh, like Paul said earlier, speed is critical. So if I heard feedback from any of my, all of my board members, we’ve got to go faster. So that’s a continual evolution of how we do things in it. Uh, it’s not traditional, not the way we used to. We’ve got to turn things around much quicker and of course it’s gotta be cheaper. So, uh, but I think speed to market with your idea is critical.
Paul Noble (35:27):
Outstanding. All right. So Paul, we’re going to go broad here, right? Yeah, yeah. Faster, cheaper, better, right? Yeah. Um, yeah, more broadly to global supply chain. And I know you mentioned black pain and some of the other, uh, predictive technologies you’re using, uh, from a vending perspective, what are you seeing broadly across the supply chains that are, you know, that are piquing your interest that you’re seeing throughout your organization and peer peers across supply chain?
Scott Armstrong (35:59):
I think watching out of stocks, especially in our industry is, is critical. And so any new tools or analysis that we have to help our supply chain people manage that is, is a very critical. So again, out of stocks in our line of business, out of stocks is a lost sales. So that’s something I think, uh, that’s something critical store industries to watch that.
Paul Noble (36:24):
Yeah. Yeah. And even more difficult now that demand is changing with, uh, as we were talking ahead of the podcast, uh, you know, we’re all working from home habits are changing, work habits are changing. Um, the plan off that has just been, we’ve seen just extremely difficult, um, to capture all the necessary signals, um, into that, into those models. Yeah.
Scott Luton (36:50):
Well, and we’re talking about Coca Cola here. I mean, I know we’re talking about a lot of other brands, but I mean, let’s face it. Coke is, is life right? To me, the delivery, the availability and the delivery of Coca-Cola, it’s not a luxury. It is life sustaining, particularly in my case, I consider it a service to society. And so seriously because though, because the brand is so prominent, the expectations are very high. Um, and, and you do have to deliver at a very high level. I can’t imagine what the world would have been like if we had been out of Coke on the shelves, instead of toilet paper, it could have been catastrophic. I feel like, but, you know, for a section of our listening audience, going back to an important thing that Scott shared kind of before we start talking about Greg and all of our affinity for, for Coke, especially diet Coke, I’m a big diet Coke.
Scott Luton (37:51):
Uh, uh, that’s my guilty pleasure, but, you know, Scott talked more about, you know, some folks may not connect it because it’s really a unique component, um, to businesses like Coca Cola, where when a customer walks into a store, if there’s not a cherry flavor, diet Coke on the, on the, on the shelves as a lost sale, you never get back. And, and that’s something that, that some consumers may not, you know, wrap their head or some listeners in our audience may not wrap their head around. So that’s why it’s so important to protect that product and that inventory, right.
Scott Armstrong (38:26):
Yeah, for sure. It’s a, it’s a loss sales, you know, with the COVID coming this year, it’s just been crazy trying to plan what brands and products get to the supermarkets really. Uh, and it’s just been an interesting year from a supply chain perspective, for sure. Uh, but, uh, once you lose that sale in a retail store, you never get it back
Scott Luton (38:47):
And you can lose it for good. I mean, this is a highly competitive environment, right? I mean, Coke has cut a significant number of brands out of the mix to be able to focus on the ones that accrue the most to the, not the brand, but also the market benefit as well. Right. They’re trying to, to reduce the dilution of effort around some of these fringe brands to be able to focus the effort and the performance on, on the brands that really, really are the core, really smart move, by the way. I mean, you know, to whatever extent you participated in that, uh, um, that is a really brilliant move and more companies should learn from that. We are far over mixed. I’m an old retailer by trades. I know that we are far over mixed in so many brands. We don’t need blueberry, um, blueberry muffins and blueberry chocolate and peach muffins.
Scott Luton (39:43):
We, you know, that some of this, this has gotten a little bit out of hand. I’m a little bit hurt that Odwalla when a went away. But, um, but, but, um, the, you know, it makes sense. It totally makes sense from a fiscal, a brand and a market service perspective to consolidate your efforts. We’re going to keep moving broadly because we’ve got, we’ve got, we did not get to some of the leadership lessons learned that we talked about kind of pre show Scott. So I’m going to go back to, you had a key lesson learned that is universal, uh, from what Robert Woodruff tell us more about.
Scott Armstrong (40:21):
Yeah. So, uh, Rob Robert Woodruff was the president of Coca Cola in the twenties, thirties, forties, through world war II and his on his desk actually, uh, in the Coke offices, you can see it. He has a motto that says, there’s no telling how far a person can go. If you don’t mind who gets the credit. Right? So then again, it’s all about being humble, working for the better of the team, not for yourself. So things good things happen over time. If you just keep doing the right thing,
Scott Luton (40:53):
I love that. And then I also want to ask you about something that got my attention now that the masters have, has been rescheduled. I think it’s scheduled for November, I believe, which is our, remember when I, when they moved the masters that like, that, that really put in as silly as it may sound to some, I mean, that is like a lock step. There’s no big, I mean, they are so tradition focused. So when they made the weather follows the masters, right. These LEDs don’t bloom until the, until Augusta says it’s okay. That’s right. Yeah. The good Lord has, has arranged a special situation with Gus and national. But, um, but so that’s coming up in November. I believe. So Scott, you’ve got a really intriguing personal story related to the masters. Tell us more about that.
Scott Armstrong (41:40):
Yeah. So two years ago I was invited to go to the masters. You know, it’s a once in a lifetime thing, if you ever get to go, it’s just so incredible. This was actually my second time to go. And, uh, I was on a bus full of other corporate people. There’s probably 20 of us that were invited and, uh, about 10 miles from the event, the bus crashed. So we actually had a, it was the first day of the masters two years in 2018. And all these people from Atlanta trying to get to the masters. I know they were mad cause we blocked the, the, the bus actually crashed. And, uh, the driver was under the influence of some type of something. So, but anyway, it turned out actually, uh, be a life altering experience. It’s one of those things where, you know, my motto is don’t put off things cause you’re never guaranteed what’s going to happen tomorrow. Right? What, it’s just something.
Scott Luton (42:33):
Yeah, it was, it was, it wasn’t just a re as a really bad accident because you spent several days
Scott Armstrong (42:39):
In the hospital. I was four days in the hospital. Luckily no one lost their life, but there was several horrible injuries on that. So it’s just one of those things that you just can’t take life for. Granted. You never know.
Scott Luton (42:55):
All right. So I gotta follow up on that story. What is, as that kind of has impacted your, your worldview can, is there one change that really sticks out that, um, that you made as a result of that experience? One thing you, you, you said you’ve been waiting to do and you did.
Scott Armstrong (43:15):
Yeah. Well, I actually, I don’t slice anymore, but I did control my golf swing. I slowed it down. Let’s put it that way with that, but no, I mean, yeah. I, um, am traveling a lot more, you know, the trips that you think you would put off, I don’t put those off anymore. I try to travel with my wife and we enjoy what we can do.
Scott Luton (43:38):
Well, yeah. Powerful lesson learned now. Absolutely, absolutely. Uh, uh, hate to learn, hate to hear that lesson being learned that way. But, um, I’m so glad that you’ve, you’ve, you’ve come back after, after, you know, spending days in, in the hospital and that no, there were no fatalities and you can have that perspective now. All right. So, uh, well, let’s make sure our listeners and, and Scott, as much as y’all got going on, I really appreciate the fact that you’ve spent the last hour and some change with us here and sharing some of your insights and expertise and experiences. How can folks connect with you and how can they, uh, you know, learn more about Kona?
Scott Armstrong (44:22):
Yep. So Kona has a website, uh, Cona services.com. Uh, anyone can access that. And of course my email, uh, as Armstrong may come the services.com be glad to answer any questions anybody has on Kona.
Greg White (44:36):
Outstanding. I really appreciate your time here. Scott Armstrong, chief financial officer with Coke, one North America, AKA Kona serves LLC. Thanks so much, Scott. Thank you guys. You bet. I don’t go anywhere. Cause we’re gonna we’re to do, we’re going to ask Rick likes to say, we’re going to talk about you as if you’re not here. Uh, Greg and Paul, there are so many different, um, intriguing elements of what Scott has shared both professional related, but also, you know, your universal lessons learned. So I want to ask you your favorite part before we wrap up here. And Greg, I’m gonna start with you. I’ll get you.
Scott Armstrong (45:10):
Oh, a little extra time. Oh, okay.
Greg White (45:13):
As I’m going to talk about Paul as well, because to me, one of the greatest takeaways was, um, well, I mean, it was probably accelerated, even though we learned about it later by Scott’s life changing event, it is, you know, do it now. Right? Um, I think both, both Paul and, and Scott, they referred to, let’s just take technology as that thing. Um, you know, big companies like SAP have learned and, and small companies and other companies like Verisign and others are already doing something that has been a change, be gotten by the network or by the, by the marketplace. And that is, they are doing smaller projects more quickly implemented more frankly, more risk averse and, and delivering value much, much sooner than a hundred million dollar implementation that might or might not return anything. Companies are requiring their technology partners to deliver early, to deliver those quick wins and to have those constant verification points that prove that this is something worth doing the entire, the entire model of technology implementation has changed.
Greg White (46:34):
And when, when both Scott and Paul talked about that kind of in tandem, it just really struck me that that is where the market is going and has gone. And it’s about darn time. I’m only saying darn because I don’t know Scott that well, but it is about time because some of these implementations have gone on for seven years on a four year schedule and they’ve cost a hundred million or 400 million or a billion dollars and delivered almost nothing but pain to the organization. I mean, you think of some of the famous bankruptcies caused by technology implementation implementations and things like that. And the model of companies like Verisign, who deliver something big in, in less than four months, 20 in one of their cases, $20 million in value in less than four months. Right. And there’s
Scott Luton (47:30):
Just so much opportunity there. And then it does make it easier for someone like Scott to say, okay, this thing delivered us $20 million in four months. If it doesn’t deliver another thing for the next four years, that can stay on the expense line. You know, uh, I love w we could book a second episode here to dive into some of what just Greg just shared. But yesterday, uh, Greg Paul and Scott, we had, um, a meteorologist owned the works for a supply chain technology platform. And he used his phrase, our eye rapid intensification about what they look for with these storms. Right. Well, I mean, really a spin on that on a much lighter note is this acceleration that Scott talks about, you know, um, uh, practical or real successful, uh, acceleration to these change, these massive change projects and how, how Greg, how that fortunately is more to be expected rather than these long delays that you’re kind of referencing. So that’s demanded these days, frankly. And I think it’s good that companies are doing it. Yeah, that’s a really good point. Yup. Okay. Paul, you had, you had a little extra time to think about your big key takeaway here from all this, all the good stuff that Scott shared.
Paul Noble (48:45):
Well, isn’t too much different. I think, you know, throughout the conversation, it was great to hear more about, and the thing it speaks to much of what, what I believe is the power of network and there’s no greater power, um, or greater network than the supply chain networks that kind of feed one another in a lot of different capacities. So, you know, power network, um, is, you know, the reason for Konas existence to bring, bring, um, many together for an enterprise trusted view of the business to support one of the iconic brands that Atlanta has and, and, you know, global brands. Um, and then what really resonated from, uh, is the, is the lift for now my wife and I were just talking about the same thing, Scott, um, getting back out and traveling and how that disruption, that, that one thing you were going to do or the pandemic, and then all of a sudden it’s just, or that life changing event that you went through, um, cherish, cherish, what you have and take advantage of opportunities, um, in this great world we live in. So,
Scott Luton (49:56):
Man, what a great note to finish up on Paul? Well, put, uh, really enjoyed this conversation, Scott, uh, I admire so much of what you shared and what, what you continue to drive, um, in your time there now at Kona. So I have to have you back maybe towards the end of the year and get an update on these big projects. Yeah. Awesome. No problem. Thank you, Scott. All right. You bet. All right. So to our listeners, first off, big, thanks to Scott Armstrong with Kona, Paul Noble, our esteemed, um, guest cohost, Paul, appreciate what you and the verus and team do. Greg big, thanks to you. We are production schedule. I’ll tell you everyone’s ready to get their thought leadership out there, here lately. Right? They are. And, you know, look, I mean, let’s think about what we touched on here. We talked about finance it and, and personal, personal improvement and goals, man.
Scott Luton (50:48):
This is the total package in terms of an episode, isn’t it? It’s rare that we get that human. I mean that human right? Yes. Agreed. So really appreciate that, Scott and we’re in the cat, we’re in the cat bird seat. We get, we get to hear firsthand from the folks doing it. So to our audience, hopefully you enjoyed this episode as much as Greg and I and the rest of the team here has a, Hey, you know, be sure to check us out wherever you get your podcasts from. If you enjoyed this subscribe. So you don’t miss a thing. This is Scott Luton on behalf of the entire team here at supply chain. Now, Hey, do good. Give forward. Be the change that’s needed and Hey, act. Now don’t procrastinate. If you heard anything here. So life is good. Take advantage of it on that note. We’ll see you next time here.
Would you rather watch the show in action? Watch as Scott, Greg, and Paul welcome Scott Armstrong to Supply Chain Now through our YouTube channel.
Scott Armstrong is the CFO for CONA Services LLC, the largest Coca-Cola North America Bottler IT Services Company. Scott is a 30 year veteran of the The Coca-Cola System and has worked extensively in various global financial and IT roles across his KO career. He started his finance career working as an international auditor in Germany in 1989 and then joined Coke Germany in 1991 to begin his KO career. Moving back to Atlanta with his family in the summer of 1996, he has held a variety of financial and IT related roles working on major system transformation initiatives over his career, including positions in Corporate Finance, North America IT and the global Bottling Investments Group. In January 2016, Scott moved into the role of CFO for CONA Services LLC and has been focused on helping build out, operate and enhance this new IT Services organization that supports the North America Bottling System.
Paul Noble is Founder and CEO of Verusen, a technology firm that uses AI to predict inventory and harmonize data organizations in a variety of industries. Verusen automatically integrates to your ERP and disparate data sources — single or multiple systems, one or many locations. Then, the platform’s Artificial Intelligence learns from your own inventory experts and encodes their knowledge to provide seamless inventory harmonization. With Verusen, you get automatic naming and categorization with 99% reliability at scale — a true material master. Paul’s passion for entrepreneurship has always shaped his approach for go-to-market strategies and tools, which was the driving force behind pursuing his dream of launching Verusen to improve the availability of easy-to-use technology for optimizing the supply chain for materials and MRO. Learn more about Verusen here: https://www.verusen.com/
Greg White serves as Principal & Host at Supply Chain Now. Greg is a founder, CEO, board director and advisor in B2B technology with multiple successful exits. He recently joined Trefoil Advisory as a Partner to further their vision of stronger companies by delivering practical solutions to the highest-stakes challenges. Prior to Trefoil, Greg served as CEO at Curo, a field service management solution most notably used by Amazon to direct their fulfillment center deployment workforce. Greg is most known for founding Blue Ridge Solutions and served as President & CEO for the Gartner Magic Quadrant Leader of cloud-native supply chain applications that balance inventory with customer demand. Greg has also held leadership roles with Servigistics, and E3 Corporation, where he pioneered their cloud supply chain offering in 1998. In addition to his work at Supply Chain Now and Trefoil, rapidly-growing companies leverage Greg as an independent board director and advisor for his experience building disruptive B2B technology and supply chain companies widely recognized as industry leaders. He’s an insightful visionary who helps companies rapidly align vision, team, market, messaging, product, and intellectual property to accelerate value creation. Greg guides founders, investors and leadership teams to create breakthroughs that gain market exposure and momentum, and increase company esteem and valuation. Learn more about Trefoil Advisory: www.trefoiladvisory.com
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