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The Future of Supply Chain - Connected, Continuous and Demand Signal Driven

Mister Beacon Episode #116

· Mr Beacon

Where are the dark spots in your supply chain?

How could your business transform with digital twin of your supply chain?

We are talking about continuous, real time location, condition, and contextual data, when you need it.

In 2014, a team of Silicon Valley veterans built a cloud system that bridges the physical and digital worlds. Cloudleaf’s vision is to ‘take a radical new approach to unlock the massive value within supply chains, and transform them into more powerful, data-driven strategic assets’ using IoT, Artificial Intelligence, Machine Learning, and advanced analytics. This week we sit down with Mahesh Veerina, CEO of Cloudleaf to learn how continuous visibility leads to continuous intelligence. All this allows you to move faster and make more informed decisions. Tune in to get the inside scope on the business justification for investing in real time visibility and sensing – what the ROI is on tagging everything, adding in the reading systems, and all the changes in processes.

Transcript

Narration 00:07

The Mr. beacon podcast is sponsored by Wiliot, scaling IoT with battery free Bluetooth.

Steve Statler 00:16

Welcome to the Mr. beacon podcast. wonderful to have you with us. This week, we're going to be talking about a trend that's very significant in IoT, but more importantly, more much more broadly in business. It's a revolution in the way supply chain is executed the way it's performed. And we're seeing a huge shift now, which involves a lot of very interesting technology and systems to move from an older generation of supply chain to a newer generation of supply chain that gives much more visibility, continuous real time visibility. And this is an incredible opportunity for businesses. And also for us in the IoT ecosystem. So I am really pleased to have Mahesh Veerina who's the CEO of one of the companies that is at the vanguard of this space, they have some amazing customers. They also have amazing investors Intel capital is is one of them. JOHN chambers is also an investor and an advisor to the company, the ex CEO of Cisco. So Mahesh, thanks very much for joining us to talk about this.

Mahesh Veerina 01:31

Thank you, Steve. Appreciate the opportunity to be on your show. Thank you.

Steve Statler 01:36

So maybe we should start off and talk a bit about this trend, what you know, what is it that is changing? What are the drivers to the kinds of systems that you are implementing?

Mahesh Veerina 01:50

Yeah, no, I'd say it's a very fascinating thing going on and very exciting trend. Steve, right. So I see it as two major shifts market transitions happening one, the digital that's impacting supply chain. It's impacting everywhere but in supply chains, this whole digital transformation and going digital right manual processes being automated and so on. And I'll elaborate a lot more on these two points. The second is the supply chains themselves are historically built more supply driven and now they are becoming more demand driven. Right. The second aspect of that is they were also very planning centric, you plan plan plan, you take the best laid out plans to battlefield and things start going wrong right. So now there is a focus on execution side. So what they used to call this SLP sales planning and operations is now becoming essential IE sales. Her operations and execution kind of platforms, right? So those are the two big shifts. One more from just generally this digitalization and second is the what I call this planning and supply centric moving more to demand centric networks. Now, that's the big shift. If you double click there are some very interesting why and work and we can go into that.

Steve Statler 03:26

Yeah, no, I, I'd love to let's double click in a second. So you are a company that is providing the cloud systems and also the some of the the tags, the the hooks, the bridge between the digital and the physical world, and we'll talk about what those are in a little bit. Are you replacing systems when you come in? is there other sort of legacy systems or is this like a Greenfield area?

Mahesh Veerina 03:57

No, great question. So I mean, pretty But if you step back and take a look right, what's the current situation? Where is the market and how do they solve these problems? So historically in the last 1520 years, when you build these supply chains went through a huge I would almost call it we're on a supply chain for Dotto era. And they're all local. Then they went kinda more suppliers and all that then went global, nowhere into this for Dotto washroom. So how do you build them? These are in the last 20 years, you have a year p system managing all your systems of record transaction warehouse management system, transportation management systems. So over time, these companies have built up or acquisitions and stuff, many, many, many fragmented data silos and data fragmentation, very rigid data model. So that's how they're built right? One system doesn't really talk to the other system, and you have all the information but he will learn how the insights that's one of the Kinda hold this assault right now where is the need for this real time and all that coming in as you build these systems and let's say you have a take example like you have a pharma company, making vaccines and planning to ship them once they leave your facility and their multimodal hops, you really lose visibility on what exactly is happening. And the only way to keep track of it today is stick in like a little what they call a data logger goes through the entire journey up stick it into a laptop or PC and and get the data post facto right. So that's now moving to I want to know real time where is my stuff? What condition is attend? When is it arriving? Is it in compliance, these are types of things that are bringing this whole real time visibility and sensory stuff into the

Steve Statler 06:00

So are these data loggers akin to kind of the batch systems of the past? It's automation, but it's not real time automation or what do you consider to be real time?

Mahesh Veerina 06:11

So, so many, many aspects, right. So what happens is, let us say, as a pallet of these vaccines leaves facility today, it's a transaction in a system the way it operates today. And then as it moves along, the many, many there is a proc moving it from your distribution center to airport sits there, got on a plane, there is another hop on a truck and finally get to a customer, let's say. So all these geo, you can almost think of them like waypoints along the journey. There is more data and what's happening really, to that package as it moves through. It could be stranded at the airport, you really don't know if it really got on the flight. What condition is it in while it's moving? Right? Is it exposed to the elements so that data is being recorded for compliance reasons, but you don't get to see it until the end of the journey. So now with these modern systems, what's happening is you're putting a sensor on it. And it's giving you continuous signals through a cellular backhaul or what have you. And when it hits a geo fence, you know exactly when it entered the geo fence. They did exit the geo fence. And now you can add in contextual data like plain data, saying, hey, it was supposed to be on Lufthansa, whatever lH 24. Flying Milan to Frankfurt. Did it really get on the flight? And where is it are it's left at the if it's still in Milan. It's sending signals back saying I'm standard here, right? So today in your transactional systems, he really can't tell. You think it's on flight, you really don't know. So that's where all these real time nurses kicking in, and at the same time, not just the location. You're marrying it with a lot of contextual data saying what's the temperature what's the humidity where to send a bulk container? Is the door open or closed? Is there a tilt? All these is it exposed to light? So these are all real time. Steel, right?

Steve Statler 08:09

Very good. So, as a past engineer, this makes a world of sense to me. I mean, you'd want real time you'd want a continuous view. What is the business justification for investing in this? Because this sounds like it's not this is not a trivial exercise, where we're talking about how does the CFO sign off on the kinds of investments because we're talking about a lot of connectivity, tagging, reading infrastructure, your systems and changes in processes, what's the what's the business benefit?

Mahesh Veerina 08:48

Well, number of benefits, right if you look at and also thanks to I mean, is not new people wanted visibility. Visibility is a foundational element. But it's one of those intersection points in time. Technology has technologies the other vector that's driving it there, right? I mean, you pick up your outage cell phone, you probably have 15 different cents send for all kinds in terms of small shipping and billion. So sensors have become cheap. connectivity and mobility is ubiquitous cloud is a centralizing thing again, right and then all these advanced processing. So once all these came together, these solutions became very economic to implement. Right? Right. Another benefit for the for the for the businesses, is on time delivery, measuring number of these metrics. Is this in compliance, right? These are all big benefits, really productive if a vaccine package gets lost in talking losses in the millions of dollars typically, right? So this, especially in the High Value assets, the ROI is huge. Is it in compliance is there a product loss is there on time delivery, which has a customer impact. So that's how they're evaluating the ROI. Same thing in indoor facilities as well, we're seeing right. When a when a bulk material most process within a facility, if it gets exposed to an ambient temperature for too long, it has to go through a quarantine cycle cost millions of dollars for them, right. So ROI is very easy to justify. And this technology improvement simplified the implementation pretty much right and pretty cost effective to do this. It seems to me like if

Steve Statler 10:41

you know where everything is in your supply chain, you can potentially have less of it. You can have more of it more of what you have left in the right place at the right time. It's freeing up capital, it's driving better conversions, of sales. All of these things as well.

Mahesh Veerina 11:01

Exactly. You're hitting the nail there. That's the other, I was only talking about the condition and location and where is it? The other dimension is how many of it do you have? Yeah, if you go into the CPG, and retail space is the right stuff, right place, right time. Right? My, this buffer stock issue is a big thing. So that's another dimension. Now unit level economics can easily measured as well, right? So yeah, absolutely.

Steve Statler 11:30

And you, but I can see why the focus given what we're going through with the pandemic, and vaccines, I think, at the front of everyone's mind, so let's come back to that use case in a minute. But I think what we should do now is just talk a bit about cloud leaf. And perhaps you can tell us a bit about your your company and what you're offering that makes this transformation feasible for some some very large customers.

Mahesh Veerina 11:59

Right again, Let me start by giving you the big picture why this right I talked a bit about how the situation is most of the supply chain is architected as a large scale siloed systems lots. Meanwhile, the world has moved on Amazon if occation we all experienced that right click click, you expect same day delivery next day delivery, you know where your stuff is consumer behavior completely changed the expect authenticity, right? Is this ethically so sustainability kind of concerns. So that whole shift in demand driven? Very speed of delivery, all that is one of the dimensions. Then the last dimension is we are seeing this right now in this pandemic, right like the whole geopolitical and trade tensions, right when there is a disruption like COVID all kinds of Trade lanes and it's like a multi point failure happening simultaneously. How do you cope with that? So this whole shift in supply chains towards digitization and towards more agile recently and kind of supply chains, right to be able to do at scale on demand is kind of where these are headed in the next decade or so. So that's the opportunity we saw. As we got into this. This company originally was founded as IoT company. Right, I'm one of the investors on it, then I was on the board then to call as CEO in the last three years. We go live home is a very exciting large scale operation. Then we focused our energies on the supply chain, because you're gonna play these technologies, many places, we said supply chains are going through a huge transition. Let's apply that. So our whole mission is bringing really powering these next generation digital supply chains if you will, by bringing This real time continuous visibility, intelligence and predictive insights, right? We leverage IoT, ml and cloud technologies to deliver this. So that's our whole mission. And I believe that is, I mean, I didn't know much about supply chains as I got into this. But I ran Empire food, we eat medicines, you take the clothes you buy, everything is moving through this pipe. And it's a complex global kind of network right now and how you can really bring efficiencies into that. That's what we're helping drive. And you asked a question early on in the beginning, are we replacing stuff we don't replace wireless systems are built like that. They'll become systems of record. So businesses still operate with those systems of record, like if we have SAP 95% of the time we see SAP and multiple instances of them and we go in right so SAP is still there that's used for all your transactional information gap reporting everything, but is it helping you in your operations when something is moving along in a, in a in plan set or in a warehouse or something very hard? So that's where we are moving in with the sensory technologies and all that.

Steve Statler 15:19

And so, who are the users what are the roles of the people that are using because we still have our E RP system

Mahesh Veerina 15:26

we have the manufacturing execution systems that are sitting doing their thing, who uses three four different personas that use depending on the industry type and under sector, let us say you are more in the the way broadly, I think about it is supply chains are source make distribute right. Today we address a lot of the demand is in a lot of distribute side. How is it doing from my factory delivery to my customer. I call that like a b2b logistics. From my DC is to direct to the consumer, which is a b2c or a direct to consumer. So it's like a last mile, the last mile has radically shifted also. So the distribute is one of the areas we serve heavily. And a little bit of in the factory or in the MC, whether it's in a warehouse or factory. Those are the two segments, let's say. Now, if you look at by industry sector, it's either the VP supply chains, they want to get a dashboard of what's happening in execution. They laid out a fantastic plan, they know monthly, quarterly where they want to go, but then today, what's happening operationally, is this going to arrive in time? Is it in the right conditions? These are kinds of things at a VP level getting dashboard what's read down there are these operational directors and people that are functionally responsible and then managers those are three levels we see. And this could be merchandising managers, planning managers. logistics managers somebody receiving stuff within the warehouse, somebody responsible for shipping out. These are types of personas, we see stuff. That makes sense.

Steve Statler 17:10

It does make sense. So if we kind of think about what's threatening all our lives, this Corona virus pandemic, and I'm sure there's a massive wave of research, we know there's research going on on these vaccines. And hopefully, we're going to have a few candidates. And so I imagine there are herculean efforts not just to manufacture the vaccine, but then decisions being made about how are we going to get this out to the powerful You know, one option to this and in some way, I don't know how much of this is new ground or whether this is just kind of you know, we we do this all the time, vaccines are not new, but maybe vaccines on this scale are Assembly very, very significant. If it seems like you have a lot of the building blocks to support that sort of effort, you can give people a head start, but what are the alternatives? Could is it? Is it even realistic for someone to write something from scratch? To do what you do? And this is maybe a little bit of an odd question. So So another way of asking is, tell us a bit more about what you offer, you know, what are the components? How long did it take to build it? What does it look like?

Mahesh Veerina 18:38

Right looks like two parts one, how is the COVID-19 and this current vaccine effort and and how is the platform architected? I'll get into that. So the first one interesting one you touch on we, as an industry we are focused on pharma life science, food and beverage, high value items, cold chains, FDA concerns, so on Right, that's and then manufacturing high value manufacturing. And over time we see by first half getting into more retail CPG environments as well, right? Especially with technologies like yours will IoT coming along, right? So that's the what we saw so far more life science. Interestingly, as we all see COVID has kind of drove some businesses into hyper acceleration and some into like if you are an hartling in lanes we are seeing it all around right slowdowns and so on, right. So in the pharma life science, it's been almost like a 12 to 18 month acceleration of their plans. They're all on this digitalization track. But now they have react and by December put plans, which they have never done before herculean efforts, not only r&d of the vaccines, how do you stand up manufacturing capacity? Then the question of how do you distribute this, a lot of them are going to be in the The beginning the partners we're working with, there will be in the cryo temperatures at minus 70 minus 80. So you don't lose this valuable material, right? Normally the shipping is two to eight degrees centigrade. So a lot of care has to be taken. And like I said, historically, this is short, a shipment prayer and for compliance reasons, you have a little logger, you go to the other end, pick it up and see everything was okay or something went wrong today. They want to make sure everything is digitally recorded, take out the manual processes. And by end of the year, they're standing up these facilities to know where is their stuff, right, is it getting to the right place? Is it in the right conditions, and we are talking literally billions of these doses going around the world, right. So it is a huge Herculean effort, and they're all over it. So that's where we are seeing a lot of opportunity, and we've been very busy. Just with that segment in this first half. Coming into it in March. We wasn't sure like everybody else, like, what's really going to happen? How is the demand profile gonna shape up? So we're seeing a lot of acceleration for days a little bit behind that, I would say. And, again, a lot of challenges. They're bringing in new processes. Fortunately, with our platform, we are all cloud based. You can light this up on Amazon or Azure or what have you. And Azure has become a very fabric platform for most of these companies, right? Because they're already enterprises on Azure. So like this up, and then really, we made the process completely smooth by pre integrating a number of sensors. We are completely hardware agnostic. So you can like these up out of the box and do some customization so our platform is architected, you get this empire visibility dashboard. So you onboard your assets or what have you, your shipment routes. And typically we can bring these two API s and absorb it into our platform. And now you're setting up your business rules say I have these 40 lanes I ship regularly through, and it leaves Chicago hits What are Puerto Rico and goes into Frankfurt and here, right? So these lands are all architected and rules are written after that the machine is running. Right. So that's how simple we made the system. Now, if you look at the platform architecture, the second part of your question, very fascinating. I'm aware, in these times of our whole view on this was coming into this. You touched on this in the beginning, these monolithic large scale systems won't fly in future these have to become more like the b2c micro services architectures How did over build their platform for marrying drivers and cars, right, like how do you do that with a simple mobile app and the back end platform that's doing all this magic. That's the approach we took. So everything is a large scale micro services architecture runs around the Kafka bus. And we absorb all these signals, whether they're coming from your sensors, where it says sensors, which you are agnostic, or they're coming from contextual data like plains ports or weather, traffic, what have you, right. And the third piece of data is the business systems data. So we have a data ingestion and normalization and all that that comes in. And we built a what I call a digital twin technology, division, digital twin models your supply chain. And then lastly, we have all the ML algorithms that are computing condition, eta, inventory situations and all that and generate insights up and everything is exposed as API is on top of the platform for the customers to easily build their own experiences are integrated into there are other services for you to make. So that's kind of how we go about

Steve Statler 24:05

what are the so what are the technologies that you're currently using to link the digital with the physical? I'm assuming it's it's a whole basket of different tools. Right?

Mahesh Veerina 24:20

No, I absolutely. I mean, so if you historically look at when you the many, many sensor technologies, right, there's a picking up temp, shock, vibration, humidity, what have you all that location data? Now, how do you communicate that radio signal, ble became one of the

Steve Statler 24:41

key candidates within either in transport or within and under the cellular backhaul as well. So the way we connect either gateways in the middle from the sensors that are on boarded into our platform, or directly coming in cloud to cloud, it can be coming I'm from another system and then gets into our platform, right? And then we normalize everything is that event in the system, you say event driven architecture, and then it flows up the stream. It's so exciting. I mean, it's a simple thing that we're going to continuously track and monitor everything. But it's a gargantuan task. And I think it can only be achieved riding some waves that are already building and flowing through the system and you have like connected transportation. I used to work at Qualcomm, they, they started off, I mean, the cash cow that gave us the technologies that became 4g and 5g was omnitrax, which was basically about wiring trucks, through through the satellites and that sort of thing. But you know, where are we now? Do you think in terms of having all those different steps wired I mean, it used to be that factories You were lucky if the factory even had Wi Fi and now we're seeing beaconing infrastructure and the Wi Fi and the beacon infrastructure morphs. We're seeing containers that are wide. You know, from my, myself, I have a very vested interest and my day job is all about battery tags and, and so forth. But those tags really only come into their own when there's a connection, a continuous connection and How close do you think we are to having the life of a product continuously connected from materials manufacturing, distribution, retail, and then the homie, we're clearly getting there. But the question is, when and how soon and

Mahesh Veerina 26:45

I think it's going to be a process. large swathes of it, as you said, is still Greenfield, but it's starting that's why I think of it like a pyramid at the top of the pyramid. The high value items are getting wired like We announced a deal with a company called CCF global, which is one of the world's largest cold chain container management companies, right? These are Bulk Containers. Literally they're outfitting their entire fleet of containers with these electronics. Now, you know when the door is open or closed, what is the chamber temperature? What is the ambient temperature, light tilt all that. And it has a continuous since they are conditioned chambers, they have a battery pack Luckily, so they can run it. And it has a continuous connectivity cellular, LTE and in future 5g connectivity right now, it's like a moving little warehouse with all of that. And it's sending data, how do you take that data? How do you process that data and do the insights that's what we do. We really literally wired those so it is coming very fast about Steve The way I see. And we've seen use cases everywhere like High Value assets, we have a customer where we have 30,000 assets wired up, they move across 13 facilities, and they want to continuously monitor what's happening, right. So it's happening very fast. And that infrastructure install is getting smoothened out. And mobile has become a very key piece. It's almost like a mini gateway in your hand that can communicate signals back to the cloud. So that wave is coming. And what you guys do I see hugely phenomenally going to change the world, right in the next two, three years. We have a lot of demand asking us at the unit level. How do I track at the unit level, what's going on? We work with a very large blood plasma company. And plasma is a very expensive material and rare commodity saving lives right? And everytime plasma comes out today, it's all a lot of errors and manual tracking. They slap a little barcode pepper, it's frozen. They help maintain minus 20 degree temperature. So you lose sometimes the little sticker on top. Where do you get this blood from what type you can trace it back. So they want to put electronic beacons on it. Right? And trius, literally 8 million letters a year, just this one company. So I see this coming at us very fast. The systems are not ready so slowly as we build these platforms that can absorb this data. So my own prediction, it's next two, three years. I mean, all that talk. We hear billions of these endpoints getting connected, they will become real.

Steve Statler 29:37

Yeah, there's a massive push on 5g. We're seeing more and more containers coming. connected. And I think we've been conditioned by the Uber user experience of being able to you know, the Uber is about tracking maybe your car or your, your lunch that's being delivered. But you know, what I've seen is we're starting to do that with everything. And the idea of having a view of a factory where you can see every product, every person, every tool, every batch of raw materials, every piece of finished goods, and you just see it moving around in real time and then you pull up and then you can see it real time flowing through your distribution network into the stores. And I think it's a little bit of a dream, but it's actually a dream that's coming into reality. And people will very soon expect to have everything connected and have a real time view of where it is. And I think you guys are playing an important role of of bringing all the threads together to to expose that and make it happen.

Mahesh Veerina 30:43

No, absolutely. We see. We're working with one of the retailers again use cases illustrate this very well. Right. Large apparel retailer stuff lands in the country, goes through a transloading dock they say where the break up the containers into smaller packages to distribute and they have 16 different distribution centers around the country about a 1300 store footprint the flow of inventory through that chain while their systems CRP systems know we got what our hundred thousand pieces of this hundred thousand pieces of that they just can't tell exact layout of that inventory it's more transactional another day another week or something they would rather get some sort of real time visible well that flow is how much is in the stores. And interestingly I found it's a common case I guess it third of that could be unproductive inventory in the in their game at a cash is tied up in inventory. How fast do you turn that back into the cash is the game so knowing where it is, how much of it which kind and what is happening is very important. And if you have that visibility, when an omni channel request comes in, you know exactly where to fulfill from or where to direct it This whole growth of e commerce is driving even more this visibility towards that right? And then driving that unproductive inventory down. So they don't have to do Mark downs or out of season or liquidations and recoup more cash out of it. So applications abound. And pretty much next two, three years, you'll see this explosion and COVID has only accelerated. You look at why we're seeing so many of these bankruptcy some floors of someone certain, right, and the ones that are left out to compete with Amazon pretty much and e commerce is probably going to double or triple after this. How do you cope with that? Right so it's it's very fascinating times. Wonderful.

Steve Statler 32:45

Well, Mahesh it's been a real pleasure talking to you thank you very much for your time. I know it's simple where people have to go to find out more about you carb leaf calm right and thanks very much for coming on the show.

Mahesh Veerina 33:00

Thank you. Thank you very much Steve for share it.

Steve Statler 33:09

So I don't know you are particularly musical person is music a big part of your life?

Mahesh Veerina 33:15

I enjoy music but I wouldn't say I don't sing. I don't play instruments. None of those talents. But I do enjoy music and having grown up in India and prowling globally I enjoy okay. Music so

Steve Statler 33:32

fantastic. So what what would you choose if you were on this trip to Mars and you just had three songs that you could take? What would you Yeah, that

Mahesh Veerina 33:39

was a good question and difficult one with the long trip. So I thought of Steve like, think of it like three things. One, something that brings me memories back from what I grew up, you're on a long journey, keeps you kind of going and it Solid memories right when you're on that. So one was from my childhood growing up my local music in South India, some beautiful melodious music right there. Mostly it's duets people will know that on this call but very few of them but there is a song It's a language in Telugu right that's that's what we speak so it's two famous singers ghanta salah and Susheela their songs are well I'll pick one of their songs there's so many to pick that kind of triggers my memories I thought and my childhood growing up and all that

Steve Statler 34:40

very good and if there was one one of their songs which one would you choose? Her not so many of them.

Mahesh Veerina 34:46

There is a people who know the lyrics I would say oh, there is a song called like, maybe sing a little bit. Ooh, Lucas was a this is a beautiful song, right? It's like a romance means These thoughts are going through your head and they're whispering in your ear. That's what what I just said means right?

Steve Statler 35:06

Fantastic. And so when did you move from India? Well, how long?

Mahesh Veerina 35:12

Almost 3030 plus years I came here, actually January 1 85. landed in snow in debt, right?

Steve Statler 35:21

Actually. Amazing. Okay, so that's a great start. And I love it when people choose personal songs sometimes people choose songs and they're trying to be clever but that's so that Yeah, and what would your second song be?

Mahesh Veerina 35:35

My second song so I thought something that triggers memories and all that childhood and everything right here on this sacrum is something that relaxes me I listen to some classical music by no means any expert here but and you know, I and one thing I don't have an hour get bored hearing again and again, is this Mozart Symphony, right like a piano concert or number 21 No kill her. That was a very popular one. And it's a very slow rolling. I never get tired. I hear that again and again so that something that relaxes me that's one. It wasn't a famous movie it's called Elvira Madigan. That's a tumor. Like who then lastly, it was a tough 180s music probably a piece something in the seven piece a piece that cannot Jesus me, right. Right. Some rock. I had a tough time I was looking at elton john Rocket Man, not a big stay in LA.

Steve Statler 36:37

Haven't had to say live, but that would be very appropriate.

Mahesh Veerina 36:40

Yeah, stayin alive is what I was thinking.

Steve Statler 36:44

All right, fantastic. Well, thanks for indulging us and I love that you took a personal approach to choosing those songs.

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