Charles Fallon, LIDD Founder
Well, it’s the end of the week, and the start of a new year. I want to welcome Stephan Lauzon, one of the eminent greens of LIDD. Stephan, why don’t you just tell us in, well, 30 seconds your life.
Stephan Lauzon, LIDD Partner
Oh, my God. Well, I’ve been a consultant for a good chunk of it, but also been in the operations. I’ve done it. I like to say I started by driving trucks and worked my way up.
Charles
Oh, my God. That doesn’t exist anymore.
Stephan
Yeah, no, I know. And ended up in operation and then consulting. That’s where I met you guys way back then. When I was still a kid and here I am now.
Charles
Well, you’re not telling the whole story. Yeah. You actually spent like six weeks in retirement.
Stephan
I retired three times, in fact, three times. Like I say to my clients when I meet with people, I said, I think I’m pretty good in supply chain, but I’m so bad at retiring.
Charles
But I don’t think you’re going to try it again. I think you’re going to work till you die. That’s my prediction.
Stephan
Well, thanks for that.
Charles
I didn’t say you’re going to die of work just work till you die. Okay, well, great. Let’s get into the topic.
Stephan
All right.
Charles
The subject is about 2024. And I believe we have a Gartner report that is the basis of this discussion. Yeah, we looked at it and what did they say?
Stephan
A lot of focus on AI.
David Beaudet, LIDD Founder
AI, AI, AI.
Charles
And software development and sustainability. Let’s talk about AI. What is this about European legislation Stephan?
Stephan
Yes. Well, last week they’ve set up some rules. They’ve started setting up some rules. So just the groundwork now to make sure that there’s limitation around AI. So they want to make sure that everything we’ve been talking about here, the urban union, last Friday, they’ve put a project together, so they’ll put some limitation around AI and the use of AI, of course, which makes sense.
Charles
Whatever the European Union does, it means such a large market, everybody sort of has to follow them. But let’s talk about it in terms of the supply chain. I think I was saying, the last show I went to, trade show, it was the food service trade show, IFTA. And it’s like everyone says, the calculator. Oh, this is not just any calculator. It’s an AI powered calculator.
Stephan
But it’s also on the vendor side. Everyone’s powering AI and everything on the customer side, every executive that you run into will only start, their ears only open if you say, oh, no. But it’s an AI enabled. Like, it’s this vicious cycle of a bit of hype. But what are we seeing in terms of applications in the supply chain? Anyone?
David
Well, one topic that I thought was very interesting because I was learning, or it’s not something I never thought about, was to have machine customers. So that right now we make our own purchases, then we can have some assistance that will make some of it, but the decision, it only facilitates. And actually, I don’t use them, so I can’t really talk about it. But it’s supposed to facilitate you ordering some of the goods that you need. But eventually these assistants, through AI, will be trained and modeled to make decisions, purchasing decisions for you or for even an organization. And that could bring some challenges to the supply chain. So if you think, and I think you brought up the example of promotions.
Charles
I did bring this up, Stephan.
Stephan
Yeah, he’s gonna talk about it.
Charles
He’s gonna steal my idea! Kidding.
David
So if you have machine customers, meaning…
Charles
Just so it’s clear, machine customers, I think is an alien term to a lot of people. But let’s talk about Bill Gates and Microsoft. They’ve talked about the idea of we’ll all have as consumers, personal assistants. Right. Some sort of chat bot that isn’t like the chat bots we know, which is purelator, or some service pops up. Hi, do you want to talk to me? No, I don’t. I just want to look at your website. But it will be us with our little chat bots going out in the world and doing things like, you’ll say to your personal assistant, find me the best vietnamese restaurant within 6, where I am right now. And there’s, I found three. And it’s a book me, book me a 06:00 p.m.. Dinner. And it’s going to execute all these transactions that are really just clicks and filling up fields on a website. So these machine shoppers are our, in theory, our personal assistants that know us, and we can program them to do things for us. Right, right. Okay, so keep going then.
David
These assistants will eventually evolve in not just using your preference or…
Stephan
Historical information.
David
Thank you. Historical information. But actually from a predictive standpoint, we’ll be able to make decisions and make purchasing decisions to fill a need. And therefore, what that means is, well, that’s where you brought up the example of a promotion. If some models or assistants are trained to achieve a very specific goal. I will buy this product only when his reach a certain price reaches exactly a number. Or I think you gave another good example about the music parts or pieces that I want you to buy everything. So it will create demand for some goods that may be difficult for the parts nodes of the supply chain to fill those, as it may create spikes that are very precise in time and very hard to predict.
Charles
Let’s make a clear picture of that promotion situation. So I will buy, there’s a clothing store that is very expensive, but at the end of the season. I know, and you can see it in their window as I walk past. It starts off 20% discount. No, not going 30%, but at one point, it’ll be 80% discount. Now, at that point, it’s just the drakes. They have, like, hardly anything left. And of course, being a fat man, not much of my size, right, but they have it on their website, too. And so the idea is, I’d say, hey, chat bot, when it hits 80% discount in my size, buy it. And instead of me having to pay attention every day, it’s doing it for me. In the background, it’s checking the price, checking the price, checking the price, and so now it buys it. Well, on the flip side, now I’m running this warehouse or I’m filling orders from a store, whatever. I put something on promotion, and even today, I expect to see a bump. Yes, predictable bump. But now I’ve got these automated chat bots that are checking constantly to see what the pricing is. And the minute it hits, it’s not just a little bump, it’s a huge bump. So what are we going to do about that, Stefan, on the supplier side?
Stephan
Well, and that’s where we got into. They’re going to have to fight that system on their side and put intelligence as well on their side to know where that trigger is. So if 80% is that trigger, they’ll want to make sure that they liquidate as much as they can at 70 before they get to 80, because they know that at 80, they’re going to get hit. So they’re going to have to have their resources in if they go 80, and they’ll know exactly that it’s 75. Or maybe they’ll introduce 75% now. Yeah, because they’ll want to smooth. Yeah, they’ll want to smooth that curve 3% off. They’ll want to smooth the curve. But it becomes a battle of them having the tools to be able to predict and see where those threshold happened, because they don’t know that what is your personal. So they have.
Charles
So it’s going to be a machine against the machine against the machine retailer. And all of us are going to sit there and we’ll just wake up with packages and we’ll say, why do I have this package?
Stephan
Exactly.
Charles
And then I’ll ask my chat bot why. And then I bought it for you.
Stephan
But I think it’ll start by recommending.
Charles
Your assistant is going to start by saying, oh, man, your preferred perfume is on sale at you can do today. If you do a lot of research now, an intelligence other than yours is going to do it, which is cool. And that was the other example that I was thinking about only because one of the frustrating things I have is if you buy a book of piano music, okay, so Greek. Greek has a lot of piano music, really beautiful piano music. But there’s no one book that has everything probably done on purpose. And then three books will have 80% commonality and each will have. And so you’re buying these books just for the extra 20% that you don’t have any others. But imagine if you tell the chat bot, like find all the opus numbers from one to death of greed and go out, and then it’s going to multiple stores, it will hunt eBay, it will look everywhere for you on your behalf. And that is transformative. Harley Davidson parts.
Charles
There was a comment in that report which I can’t really speak to, but then, as a retailer, how do you make sure that your product is available to those machine customers? Because if you can’t find a way and what that way is, I cannot speak about. I don’t know what the nuances are, but so that ultimately you want to make sure that these models are capable of finding your product. Otherwise you’re going to miss the boat. Because if your marketing techniques are those that appeal to emotions and sentiments, then you may not be found or the machine may not select your product as the one that is going to buy for whoever.
David
But they’ll target a lot more people that way because otherwise, only if you walk in front of your store do you know it’s 80% right. Now every other guy like you is going to know that it’s 80%, right.
Charles
Yeah, don’t walk in winter because it’s too cold. Now you’re going to know. But the main thing, I read a lot about what the report was all about and it all relates to information. Though to that day, we’re still lacking on the good information. We have a lot of information. Everybody knows that. We’ve been saying that for years. I’m sure you guys said that 25 years ago. I said it 20 years ago for sure. But we’ll need even better information than ever because it’s all about information is the key. And everybody’s complaining about the quality of. In 2023.It is funny.
Stephan
Yeah. You think about all these things. You come up with all these great and clever ideas of what you could do with AI, with machine learning, but with also just basic algorithms and programming. And then you get frustrated because there’s this key chasm of data that you’re missing, and then you start yelling, why didn’t we collect this? Or why aren’t we measuring this? And then. Because no one thought about it. Right. Well, now we got to think about it, but keeping track of the time.
Charles
So ESG was another topic. Well, and you know why this is brought in?
Stephan
Because 2024 is going to be a big year for the baby boomer like me. So we’re turning 60.
Charles
Yes! So the very late baby boomer, the youngest of the baby boomers, the youngest 60.
Stephan
We’re turning 60. So we’re out of here. We’re kicked out. So a new generation of leaders are going to take over and they’re going to change the way we’re doing business. So whether it’s through those ESG protocol that every company put in place, or whether it’s true, laws like the new law against child labor in the supply chain.
Charles
Yeah, explain this law.
Stephan
Oh, the Bill S 211, I think it’s called in Canada, it starts on January 1, and it’s a law to provide company to abuse children and abuse worker. So it’s basically what I know as the supply chain act in California. So that every supply chain executive has to sign off on, and you have to put it on your website, on your corporate website, not only do you have to file it, but you have to put it publicly displayed. So if you look at any American or California based distributor or wholesaler. Yes. You’ll see the supply chain act signed by the executive directors of the company.
Charles
And just so I understand, the Canadian law. Yes. Holds you responsible as a Canadian corporation for all abuse of workers and children in your supply chain, wherever that supply chain sits. So if I’m manufacturing on another continent, even just a component or something that goes into my supply chain, I’m responsible for making sure that those factories, those plants, those farms, all of it, is being run to a standard of what we would say Canadian labor law. Or maybe not to that extreme, but at least when it comes to like you can’t have ten year olds making cocoa beans. And you’re saying that not only your direct suppliers and manufacturer, but even if you go through, if you go through an agencies or if you go through an agent, that’s not a way to get away.
Stephan
Exactly.
Stephan
But then what that report that you make available for the public to read is you have to demonstrate that you made the efforts to avoid it.Well, that report says that you must not cover it up. There could be significant changes to your supply chains are required for you to comply.
David
Yes, but I mean, you’re telling the world that you’re complying with the law.
Charles
Mean that is a big impact for is you, of course, because you were actually a supply chain executive in California, you’ve already dealt with. So it does have an impact, something everyone has to think about. And so your point is this environmental, social, governance issue. First of all, we’ve got that change in generation where, I don’t know, it’s so true that I think the boomers are very lovely, caring people. I think they get a bad rap, but whatever. But as they retire, a new generation comes in and now governments are, more and more governments are joining California in mandating certain corporate responsibility in how we behave. And that’s something that affects supply chains for.
Stephan
Yeah, absolutely.
Charles
That’s amazing. Well, listen, we have actually zipped through this. So any parting words that you want, Stefan, for the new year since we are in 2024 right now?
Stephan
Well, no, I mean, happy new year to everyone. Happy new year to you.
Charles
And let’s hope for the best for 2024.
David
I agree. Thank you, Stefan.
Stephan
Thank you.