2020: a year to be remembered. Not just because it was our first year in existence, but obviously because of a global pandemic, too. Andreas and Christoph discussed 2020, its important learnings, and what can be expected in 2021.
Andreas Müller (AM): End of 2020, I think this is a good time to reflect a little bit on the year, a very crazy year, 2020. I think we will remember this year for our entire life. So, it's good to have a reflection of what's going on around us and how the world has changed, especially for us, our people, and the ecosystem around us. So maybe let's start with a quick question.
What has actually changed in our working environment? How have you perceived the changes, like for instance the way that we interact so much via Zoom or Teams and all these new tools? And how has this influenced your view of the company, as well?
Christoph Kilger (CK): Yeah, that's a good question. I think, as you said, it has been a crazy year. And my personal feeling, looking back on 2020 is like a high-speed train coming to an abrupt stop. At the station, or, I don't know, somewhere.
This feeling comes from observation. We lived in times of increasing globalization and increasing global trade. People traveled the world. Goods traveled around the world in containers via for instance the Siberian railroad, now connecting Europe and China. So it was a lot of movement.
Of course, we had the Internet, and we used it extensively. But me, as a consultant, I was asked by the clients to be on site. And a lot of travel time was spent on this. And all this came to an abrupt stop through the corona crisis. And in fact, people in corporate businesses were no longer allowed to go to offices.
So if I, as a consultant, wanted to see somebody at a client‘s, I don't know where to go. And in fact, some clients even abandoned the idea of a headquarters altogether, like one of our clients, a Japanese computer company operating in Europe. They don't have a headquarter any longer, and they are distributed across Europe, so there is no central place to go.
Globally, we saw this also in the carbon footprint worldwide, that all this came to an abrupt stop. Travel of people stopped, travel of goods was reduced a lot. And we learned how to deal with this new situation. And as you said, digitalization kicked in. So we are doing a lot virtually. And as we are meeting now, virtually many people do so on the globe.
AM: Yeah, exactly. I think this has changed my personal way of working. I need to organize myself better. So one of the things I needed to learn, is that I need to plan time away from the screen. To do something else, like for instance physical activity, to continue to stay fit in. I think that's also part of it.
But another thing I realized, is that when we are distributed and working remotely, some connections are somehow cut. It is more difficult to have these kinds of coffee machine conversations. This is hard to do digitally, despite all the tools we have. And we even did our Christmas party digitally with these tools! However, it remains a challenge. And I think this is one of the things we need to keep in mind when we work together online, that we need to plan the occasions to have these kinds of conversations.
How have you personally looked at this situation? How have you dealt with being on this screen all the time?
CK: So the days definitely got longer. And, in terms of actual work that we can do, this is good. We as aioneers, being a startup, from our perspective this has been perfect: our throughput with the limited resources that we have as a startup has been much bigger than in traditional ways of working. But it's as you said, it's very challenging for every individual. For me, it was as well. So I tried to do sport once every two days and reserved time for not being online.
And it also touches a point for our clients and for industrial corporations. Humans are social beings, they need direct contact with others, and they are more productive when we meet other people. I'm absolutely sure about this.
This also has something to do with creativity and expert knowledge. So you mentioned the coffee machine conversation. Many people think this might be wasted time, it's not nonproductive time, but it's not. Google, for instance, even reserved one day a week for their people to do what they want to. Whether this is time is spent at a coffee machine or by taking a walk outside, or doing anything else just to get this creativity going. Being in video conferences all day, I'm sure this kills creativity, and also the exchange of ideas which happened during coffee machine conversations is reduced a lot nowadays.
AM: …On the other hand, what we actually see is the typical thing: so as Darwin stated –I’m sorry to come to this point— it’s not survival of the fittest, it's actually survival of the ones who are best adapting to this new situation.
And this is what we’re seeing: we need to adapt quickly to change the way we work and how we interact in our company, with our clients, with our suppliers, and having the technology available. Personally, I’m very thankful that we’re in a world where we can overcome this hurdle and have this technology available to us. Which is quickly evolving, I think we have seen a big step forward.
This is just the beginning of this kind of new work because we will not completely go back to the way things were one or two years ago, where we meet physically all the time. I think that if you do it in the right way, it can be a big win for everyone. As you said: it also increases our efficiency. However, of course, I will be happy when we can go back into our office and meet in smaller and bigger groups, which will be a big benefit again. But I still think a lot of what we have seen this year will remain. And we will be able to show new qualities in the ways we interact with one another.
So maybe when we look at our company, we have only worked like this. So we are actual born in this era of full, digital collaboration. We had no other choice when we started in 2020, in April, in the middle of the first lockdown. This was a huge moment. And actually, it paid into one of the big goals we set, for our services to be only digital wherever possible.
This turned out not only to be a goal but a reality. There was no opportunity to actually go on site and work with clients as we have done before. So we were forced, but it was good. It was an accelerator for us. And actually, it worked pretty quickly.
Now, on the other hand, when we look at the fundamental idea of our company, it is to build new technology for supply chains. Because we've seen so much stuff that that needs to be digitalized. There are so many things we have seen that are still, or were still, approached and carried out in a very traditional way.
So our idea is to digitalize the continuous improvement process by gaining insights and recommending measures on how to improve them. And, of course, then organize the execution with digital tools.
By applying this to several problems and challenges, we will take a lot of unnecessary obstacles and pains out of the process. And on the other hand, I think we have a completely new way of working with clients while enabling them to continue the work after the initial phases are over.
I believe this is a new quality. And I know Christoph, the philosophy of the closed-loop into supply chain management has been one of your brainchildren.
CK: Absolutely. And I think you touch multiple things – one is applying digitalization to ourselves. One of the ideas, when we started aioneers, was to become a professional service organization, without any use of PowerPoint. And of course, this is not possible. But the idea behind it was to digitalize as much as possible and to base what we do on the data of our clients. By taking data from their operational systems in the supply chain, create insights out of this to understand how to improve their performance.
This brings us to the idea you touched briefly: closed-loop supply chain performance management. So this has multiple parts in it. And the close loop is something we took from lean thinking. Like in a plan/do/check/act cycle, we give ourselves operational targets, we measure the metrics and performance KPIs, we see whether we reach them—like inventory levels, on-time delivery, lead times cost, and so on— and whenever we have a deviation between the actual performance, where we want to be, and what our target is, we act on this.
We create a plan, we create measures, initiatives, and then execute these and make sure that we do execute them. So this is the closed-loop idea through digitalization. In particular, through cloud technology and better communication means, so that we can access data from anywhere and that we can work together virtually. The world virtually becomes a village.
We can even perform the so-called go to Gemba from Lean. This means: go to the place where it happens. This was coined by Toyota, where when something happened in that assembly, everybody went to the part of the assembly belt, where the problem occurred and looked at the symptoms and try to understand the root causes and derive measures to perform to improve the situation.
This is what we now can apply to digitalization to globally distributed supply chains. And this is what we do at aioneers. So we get all the data from the operational systems, create insights out of this, build initiatives and measures, and make sure these are executed.
AM: Exactly. This is a point that is so different. We are not only taking the old and bringing it into a digital world. We’re approaching it in a completely new way. Because on the one hand, we have all the data that is available. When I’m looking at our product, it's what we call DOTs. So we have Digital Object Twins of each individual object. Be it material or machines. We have all the data there.
We know how all the different digital twins as a system behave. And this is something we can steer and measure all the time. So it creates complete new transparency between the typical KPI or ‘management view’ and the execution level on the other hand. We actually can overcome this disconnect. I think this is one of the big issues that hasn't been resolved in the past and I think our software and philosophy and what helps, of course, is that the technology is now available to work with this amount of data while creating a very real-time picture of what's going on.
What we want to introduce is an ‘operational-tactical execution layer’, because we can overcome this disconnect between management and execution.
CK: In fact, we digitalize certain performance management processes. And from this, again, we have a learning component and learning experience: we can track how good our last inventory reduction initiative was, or our cost reduction initiative, or what problems we have with lead times from suppliers. Okay, we set up initiatives and measures to work with the suppliers to accelerate.
We now have this in our digital AIO Impact platform, we have a digital twin of this process, not only of the individual objects, you mentioned the DOTs, but also the performance management and improvement process itself. So we can learn from this, we can also accelerate the actual performance management and improvement process by bringing in what we call a library of knowledge. So how do we perform an inventory reduction program? What steps are needed? What options do we have? All this is now supported by this platform. And, in the future, we also envision that businesses can learn from each – other without giving up their individual data privacy, of course. But learning from experiences, also across sectors can be of a lot of value.
AM: Absolutely, even in large corporations, where we do see very compartmentalized production facilities. Everything comes together in our platform, so fairly quick you can start benefiting from the learnings in other parts of the company.
Like the knowledge library, you just mentioned. In a way, it's, it's part of the PowerPoint problem we talked about before: if you have this knowledge in a central, digital, real-time tool – it will be enriched and it will grow. This will impact the quality of the initiatives you carry out. You’re not depending on the quality of individuals, who may be experts or pretend to be experts. You gather all knowledge. And I think this brings in a completely new quality. Let’s be clear: it won’t replace a human being, but it gives you new tools. It enhances the capability of the people in the supply chain, production, but also beyond, to work more consistently with higher quality and higher efficiency. It also provides the opportunity to build a community across the industry, as you said, so, this is really something that drives me forward when I look to 2021.
So we are at this point where we have the software, developed the technology to this to a maturity where we can launch for more clients, and I think this is a huge step forward for our company. I think 2021 will be the year where we will have a big go-to-market with our technology.
However, on the other hand, we will still face a lot of uncertainty, I guess 2021 will still be a very challenging year ahead, despite all the recent positive developments. But we still see interruptions in the supply chain. One picture that is in my mind currently is all the trucks that are parked near an airport in the UK because they've suddenly closed the borders due to a coronavirus mutation. This shows us the problems won’t disappear quickly, so I'm curious about your view on 2021 on the changing world, and how we can contribute to that.
CK: When you mention the UK – the specific coronavirus situation going on now is one thing, Brexit another. Both will be there in 2021, but I think they will be of reduced importance. We will learn how to live with the novel coronavirus, there will be vaccines that we can use to protect large parts of the population. We will also learn how to cooperate between the EU and the United Kingdom.
I think that will be a third topic that will come up with some power in 2021, which is sustainability, carbon footprint, and global warming. Supply chains are the largest consumer of power, energy, transportation, or any type of consumption of natural resources. Supply chains will be in the middle of this, both in manufacturing and logistics. We need to get better control of supply chains to reduce waste. What we at aioneers design in terms of software, expertise, and skills directly helps to make supply chains greener, more sustainable, and to comply with global regulations. I think that this will help to accelerate our growth and that we will be in a position to provide actual value add and guidance to the global supply chain and global corporates to adapt to the new reality in, of course, a Brexit world, a COVID world, but then, as I said, mainly sustainability and compliance.
AM: I think so too – this topic is not only coming up, it's visible in the real world, we all see the effects of global warming in its early stages. We need to be aware of that. The role of supply chains can play here is on the one hand performance, on the other hand, sustainability in its various dimensions. And then there is resilience, of course, so this is one of the big learnings of 2020. It's good to invest in supply chain resilience, to be able to cope with challenges when they arise, and to be prepared and know what to do.
We have seen some companies that haven’t been prepared so well. Of course, they've dropped in their performance and their supply chains are somehow disturbed, or at least to a certain extent dysfunctional. Of course, this is something that is, to a certain extent, avoidable. Not everything is foreseeable and predictable.
I believe this will become one of the drivers for the next decade. We have this variety of topics, like for instance compliance – where Germany is introducing the Lieferkettengesetz, the supply chain law, that will influence the way supply chains work and interact. Maybe it's not affecting everyone, but in the end, we will that you need to be compliant. Which should be a natural thing for a company, not to use child labor and things like that. So but yeah, you need to control this. And it makes a lot of sense to bring that into law to be able to attack these things.
CK: I’m sure digitalization will help to create a better state of resilience, enabling better reactions to unforeseen events, and to be compliant. All this boils down to: how can an organization deal with data? How good is their data infrastructure? Are they able to migrate their operational systems to the cloud? Do they have all the data protection security systems in place? Is their master data up to standard? Can they exchange data with any other partner, let it be suppliers, authorities, customers, or partners like us taking over certain managed services for them.
All of this is very important. Organizations have different levels of maturity, some already invested in clean data and IT architecture and they can adapt to this and actually use the potential of digitalization.
Others learn that their data is scattered around many systems in different formats, that these systems cannot talk to each other. And so they need to innovate and renovate their IT infrastructure first. And as you know, for many projects with SAP systems and other ERP systems, this might take some time and will induce a lot of cost and resources.
AM: Yeah, exactly. One thing we haven’t tackled in our conversation yet is culture. In a lot of what we are doing, the right culture is a huge enabler. We were lucky to have this opportunity of building aioneers and building a new culture. We can set up principles, rules, and manage our own agenda, on how we want to work together and interact within our ecosystem. This has been a big driver when it comes to adapting to the changing environments. One of our core principles that comes to mind is that we aim for the best solution. As leadership, our task is to work and live this principle, meaning that we are facilitators in this process, and it’s not about us, our ego, or whatever. That is a big part of our work. So even if it’s getting tough, we have a culture that enables us to perform on the highest level.
I think this will, this will remain a focus for us in 2021 because there is always work to do, to be aware of this all the time, that you’re aiming for the best solution. But it’s one of the cornerstones when it comes to building a high performing company and the team around us. And of course, it allows us to also grow individually. When I look back on 2020, I think this is a big step for us, to introduce that culture, and form that culture and figure out how to live with it daily.
CK: I’m sure we’re also carrying over this thinking and this approach to culture to our clients. They see how we work, the team we have built. I want to thank everybody at aioneers for working with us and carrying forward this vision, living it every day.
And the clients benefit from this directly, both from using the software where all these innovative ideas go into, and, as you said: we are striving for the best solution. This is reflected in our software products, but also in the professional services we provide, where our clients see the spirit we bring to help them get to the next level of performance in their supply chain and their organization.
AM: Absolutely. So it’s not just about us, it’s about how we interact with our clients. And it’s also their choice when they select us. They, they feel it actually, and our brand is built around that. It’s a huge part of it and that's why I think our clients like to work with us and, and I really appreciate that we have come to this point so quickly.
However, I know this will require a lot of work and will remain a big topic in 2021. And with that, I would like to thank all the aioneers for contributing and for bringing in the best of themselves and I'm looking forward to a very interesting and challenging 2021.
CK: …And let me pick that up, and join you in thanking everybody. But also: thank you to our clients, for giving us your trust and letting us help you to accelerate your way your path your journey into a digital supply chain and future.