Building an End to End Quality Operation | Inspectorio | PI Apparel

Hello everyone. Thank you for having me today. Uh, my name is Nick Ginzio. I'm the Senior Director of Revenue Expansion at Inspectorio. And today what I want to talk to you about is building an end-to-end production operation without limits, freeing your production operations from lock-in technology solutions. So first, just a quick introduction to Inspectorio. Uh, since 2016, Inspectorio has been on a mission to create products that revolutionize the supply chain by increasing transparency across different stages of production. Inspectorio is leading the transformation of the global production chain by building an interconnected, empowered, and sustainable production network. Now, to refocus on the topic, uh, as an introduction, I, I wanna take a step back and look at the broader industry landscape and environment. And, uh, there's a pretty interesting, uh, study from Gartner this year, in October that was focused on the previous 2019 to 2022 period. And what we saw during this period was extreme volatility in supply chains with risk events not only occurring but proliferating. And the rate and volume of these disruptions is becoming a significant risk for supply chain continuity. And on the— oops, sorry about that. On the right-hand side of the slide here, a graphic from Gartner just helping to illustrate past disruption events that we have already been dealing with and how those have continued to have impact on availability of supply, freight, and demand. So clearly significant negative impacts as a result of these disruption events. Beyond what's happened in the past, looking to the future, there's also a marked slowdown in global economic growth that's now anticipated for 2023. So significant economic headwinds that we are anticipating in the future. And, uh, looking at Europe and the United Kingdom, we're already seeing that they're either already in or very close to being in a recession, and it's starting to look increasingly likely that the United States will be joining them in a recession as well. And then when we consider economic growth slowdown in China and, uh, continuing COVID restrictions, the overall outlook is pretty ominous for 2023 and beyond. So besides past disruptions and likely future disruptions that we need to be anticipating, it's also important important to take a step back from your own organization and consider what your exposure to shocks from these disruption events might be. And an interesting study from McKinsey showed that heavily traded labor-intensive value chains, such as apparel, are highly exposed to pandemic risk, heat stress because of their reliance on labor, and flood risk. And of the 5 most exposed value chains, apparel accounts for the largest share of employment, with at least 25 million jobs globally, according to the International Labor Organization, ILO. So besides apparel though, we can also see, you know, for rubber and plastics, for textile, for furniture, other sectors throughout the industry having significant exposure to shock from these disruption events. So not only do we have to anticipate these events, but it's also important to consider what is my organization's exposure to the shock from these disruptions. Now, taking a quick look at a study from Deloitte in 2022, their Consumer Product Industry Outlook, we could see that 90% of executives surveyed said that their company experienced significant challenges to secure inputs and/or get products to market and keep them in stock. And then 70% of, of companies surveyed believe that significant disruption would extend through the entirety of 2022. I think we've seen that. And now looking ahead to 2023, again, very likely we're going to continue to see more unpredictable disruptions. And then 90% of executives surveyed rate supply chain issues as the greatest threat to growth. So clearly some significant concern among executives and organizations on these topics today. And then something else to consider is that averaging across industries, companies can now expect supply chain disruptions lasting a month or longer to occur every 3.7 years with the most severe events taking a major financial toll. And if we look backwards to an event like the COVID pandemic, it's really important that we think of that as a reminder that while events like that can be an outlier and they can be rare, it is very possible that these events are going to occur, and it's extremely important for organizations to consider that in their strategic planning and decision-making processes. So now just coming back to the global economic outlook, ultimately the global economic growth is projected to slow from 5.7% in 2021 to 2.9% this year, then maybe average 3% in 2023 to 2024. And with that, there's going to be significant global pressure to cut budgets. And with cut budgets, that means that we'll have to pivot to overcome constraints. Less budget or reduced budgets means that you have resource constraints that you need to deal with. And it's going to be important to ensure you have an adaptable production management platform in the event of a disruption, and you'll need to be able to change course rapidly to optimize performance and to improve efficiency. Because ultimately, with resource restraints, you're probably still going to be focused or forced to achieve either the same level of productivity or more productivity with less resources. So the tightening of global financial environment is ultimately going to ask you and your team to do more with less. Resource optimization is going to become critical when unchanged or higher productivity expectations clash with constrained resources. And you're ultimately going to have to ask yourself, what new ways will you find to reduce operational costs? Now, another challenge in the face of reduced budgets and constrained resources is a lot of organizations will probably shift their focus to either reducing or optimizing their investments in IT. So in an environment where you are going to have less budget available, to invest in IT, it's going to be even more important to ensure that you are investing in the right solutions that will help you optimize your operation, drive efficiency, cut costs, and enable either the same level of productivity you're at today or improve your productivity with less resources available to you. So it's going to be very important to leverage technology to unlock and optimize the potential, uh, that you have with the scarce resources you have available to you. And I'll focus on one particular case study that I think illustrates this pretty well from the past, which is, uh, one of our existing customers today, Interloop, and how they responded to the disruption and the shock of the COVID-19 pandemic. So Interloop, uh, for those who aren't familiar, is one of the world's largest hosiery manufacturers and exporters. And they leveraged Inspectorio to survive and thrive during the pandemic when the cost of production and transportation rapidly increased. Uh, one of the issues or challenges that Interloop had at the time is that they ultimately rely on a widespread network of factories to deliver quality products while continuously improving their production practices. So when the pandemic struck in 2020 and all of the shock and the disruption that came with that, it was very quickly clear that there was going to be a need for better implementation and oversight of standard operating procedures. So how did Interloop approach doing this? A couple of things that I'll focus on. First, they leveraged our Inspectorio Site product for their product quality management operations to focus on centralizing data operations and communication and ultimately optimizing their operation, driving efficiency and reducing costs, and then also reducing their reliance on inspection services from external providers. So again, finding opportunities to take advantage of the technology to operate more efficiently and operate at a lower cost. Simultaneously, they took advantage of Inspectorio Rise, our factory compliance management platform, to maintain health and safety compliance by leveraging verified facility data for a consolidated view of COVID-19 health assessments within their factories. So a lot of organizations can, uh, sometimes fall into a trap of thinking that, resiliency and risk mitigation comes at the cost of optimization, efficiency, and cost reduction. These don't have to be mutually exclusive concepts. They can actually coexist with one another with the right solutions in place. And Interloop is a really great example of driving resiliency, driving risk mitigation while simultaneously optimizing their operation and reducing their operational cost. Now, moving on from this, there's, I think, some lessons that we can take from this particular example. And one lesson that I'll call your attention to is the concept of investing in flexibility for whatever solution you're planning to implement. So an important question to ask yourself is, how are you going to leverage your technology stack for flexibility in your operation today? Probably more importantly, do you have the right technology stack right now to be able to drive flexibility throughout your operation, particularly in the face of unanticipated disruptions and shocks throughout the industry. So some thoughts that I'll leave with you here is you don't wanna limit your operational options with the technology solutions that you implement. It's important to be agnostic with your entire tech stack for true digital transformation. And solutions that I would recommend that you seek out and evaluate would be ones that help you avoid tech lock-in. And I'll focus on this a little bit more in the presentation, but then solutions that help you optimize your production operations end to end. Again, drive efficiency and drive cost reduction. Continuing on the idea of investing in flexibility, something else that I'll leave you with is that supply chain managers are going to need to avoid conventional approaches to supply chain management. Traditional supply chain management is often linear and heavily manual, and the impact of risks on manual systems is often magnified, particularly when you deal with unanticipated disruptions and shocks. Some interesting data from McKinsey in a survey of supply chain executives that I, I found particularly interesting was that 90% of executives are expecting to adopt new technologies for supply chain planning over the next 5 years. However, only 66% of those surveyed expect to use the technology that's being offered by their existing software providers. So there's already an important process that's happening in the industry where organizations are taking a step back and evaluating the solution providers they're working with today and asking themselves whether those providers are the right organizations for them for tomorrow. And this is something that I think is critically important to do as an organization. Look critically at the solutions you currently have and those that you're considering and think about, is this a good investment? Not just for today, but is this going to be a good investment a year from today, 3 years from today, or 5 years from today? So another key lesson that I want to discuss is avoiding tech lock-in when you do invest in digital solutions. And what do I mean when I say tech lock-in? Ultimately, what I'm referring to is investing in solutions that ultimately make it very difficult for you to flexibly adapt your operations. So something that's important to do when you're evaluating solutions is, again, to focus on an agnostic tech stack that will help you reduce risk by being more flexible as an organization. And there are important questions that you should be asking relationship, and it's ultimately going to make it very difficult for you to achieve those strategic objectives that you're focused on. Now, continuing on the idea of avoiding tech lock-in and, you know, an interconnected tech stack that gives you a holistic view of your operations, again, it's going to be very important to centralize and analyze data from a holistic platform. Again, that doesn't mean there's going to be one single solution that is going to give you that view, but as you build your tech stack, thinking through how are these solutions going to connect with one another, how are they going to seamlessly integrate, and how are they going to give me the holistic viewpoint that I need to be able to drive effective decision-making end-to-end throughout my entire value chain? Then just continuing on this idea of leveraging data and analytics and the importance of it, First, something that I want to focus on is an article that was published by Retail InfoSystems and Consumer Goods Technology. And something that I found interesting that they shared was that the ability to reroute components and flex production dynamically across sites can keep production going in the wake of a shock. So again, when dealing with unpredictable disruptions and the shocks that are associated with that, being Adaptable and being flexible can help you avoid loss of work. It can help you avoid loss of capacity. However, this requires robust digital systems as well as the analytics muscle to be able to run those scenarios. So here, some additional data that I have up on the slide just shows from the same source the top 5 areas of focus for analytics today from demand forecasting, consumer insights, pricing, promotion effectiveness, productiveness and logistics optimization, but then the top 5 analytics challenges that organizations are facing when trying to leverage data and insights. And some of those challenges include absence of clearly articulated strategy, right staff not in place, inability to integrate data from multiple sources, company culture, and budget. And inability to integrate data from multiple sources, again, really critical challenge to focus on when you're evaluating your solutions. Are my solutions going to integrate together effectively to give me that holistic view and the insights that I need to make effective data-driven decisions. A couple other things that I'll highlight here is that the MIT Tech Review found that companies that are utilizing data effectively and leveraging artificial intelligence and machine— artificial intelligence and machine learning can drive 2 times more data-driven decisions, make decisions 5 times faster, and execute at 3 times the speed. So in an environment where you're trying to either maintain or improve your competitive edge, while you're simultaneously trying to mitigate the risk of disruption, leveraging data and analytics is going to be critically important to help you achieve that objective. Something else that I want to highlight from McKinsey is a, a survey that they did of 71 global supply chain leaders in mid-2021. And what that showed was that the success of an organization's planning was strongly linked to its use of modern digital tools, especially advanced analytics. Compared with organizations that reported problems, successful companies were 2.5 times more likely to report they had preexisting advanced analytics capabilities. And of the companies that had difficulties managing their supply chain during crises, 71% were saying that they are ramping up their use of advanced analytics. So again, effective digital tools and effective, effective digital analytics are going to be extremely important to maintain or improve your competitive edge particularly in an environment where you may be dealing with constrained budgets and constrained resources. So as I come to the end of the presentation, I think for a lot of people, the idea of beginning to evaluate solutions and really putting kind of a digital transformation strategy in place can be very daunting and it can be really challenging. And sometimes it can be difficult to understand where to even begin. With something that can seem like a very big, unwieldy, and challenging process for an organization. So a few things that I would recommend focusing on first. Overall, ultimately looking inward at your own team and at your own organization. And 3 areas of focus that I would recommend. First, identify the segments within your supply chain that are most vulnerable to disruption in the first place. Once you've identified that, Develop a strategy to mitigate those risks through the application of digital tools, and then build a collaborative program with your ecosystem partners. Doing this will already put you on the path to understanding what solutions are going to ultimately serve the need of mitigating the risk that you've identified throughout your supply chain, particularly on the topic of potential disruption. Second, identify your current digital capabilities. What do you have in place? What's already preexisting? And then after you've identified that, really start to define a strategy to adopt the appropriate digital solutions at each stage of your development. You may have some solutions in place today that are already going to serve your strategic needs, but then you also really need to critically evaluate solutions that you may have that simply aren't going to help you get from point A to point B. And then finally, Investigate any data silos that are preventing you from making data-driven decisions. And then once you've identified those silos, begin to define the level of data hygiene and the efficiency of data collection within your supply chain systems. Once you've done that, begin identifying tools and solutions that are going to help you address the pain points that you find, and then ultimately eliminate those silos. Tearing down those data silos, having a holistic view of your organization end to end is going to be critically important to be able to drive data-driven decisions that again will help you optimize your operation and reduce costs in the face of constrained budgets, particularly in the upcoming couple of years.