2928: PwC's Insights on Digital Operations and AI Integration

[00:00:00] How can organisations truly harness the power of digital operations to transform their supply chains? Well today I'm joined by Carla DeSantis, Partner in Operations Transformation at PwC. We're going to discuss insights from PwC's recent trends in digital operations survey

[00:00:22] and Carla will share key findings and also help me explore why so many companies are not seeing their expected returns on those technology investments and those expensive tech projects. And we'll also dive into the challenges of tech adoption, the importance of upskilling

[00:00:38] the workforce and the nuanced integration of AI in operations. So are you ready to uncover the secrets to a successful digital transformation in supply chain? Are you curious about what that looks like?

[00:00:53] Well buckle up and hold on tight as I beam your ears all the way stateside where you can join me and Carla in a conversation about all this and much more. So a massive warm welcome to the show, Carla.

[00:01:06] Can you tell everyone listening a little about who you are and what you do? Absolutely, Neil. Thank you for having me. I'm Carla DeSantis. I'm a Strategy and Operations Partner at PwC. I cover multiple industries, but I really do mostly focus on consumer and retail type

[00:01:25] companies and industries. I would say I've been a consultant now longer than I've been in the industry. And as a consultant, I focus on designing and activating differentiated operating models that strive to drive sustainable growth while also making sure we keep costs in check.

[00:01:51] That's what I would say I do. Well, it's a pleasure to have you on the podcast today, especially because the speed of technological change continues to move at breakneck speed. But there's also a realization that it might never move this slow again.

[00:02:04] And we're all trying to make sense of everything. I recently came across a PwC report. It was the Digital Operations Report. So for our conversation today, can you just set the scene and tell me a little bit more about the report, a bit of context behind it?

[00:02:20] Yes, absolutely. I'm glad you found it. We've been doing this report, I would say, for about three years. And we started doing it, Neil, as you would imagine. As a consultant, we always do the framework of strategy and then people, process and technology.

[00:02:39] And it's kind of hard to separate those all now. They're all sort of intertwined. And the survey we started was really to try and tease out, are you thinking that way, Mr. or Mrs. Corporation? And so the focus of the survey is to sample blindly executives.

[00:02:59] It's a supported survey. We use an external firm to help us do that. So we do a vetting process for who participates. We look for certain levels within that group of folks. And this year, we surveyed 600 executives across a variety of industries, focusing the

[00:03:22] questions you saw the survey on the questions that we asked around, how are you investing in technology? Are you getting the returns that you want out of technology? But this year, we also brought in it to more operating model questions as well.

[00:03:38] So a bit irrespective of technology, what are companies focusing on and how are they focusing? And just from a high level there, from everything inside that report, what would you say are the key findings? Did anything surprise you too? So last year, the number of 83% sticks out.

[00:04:01] We were shocked to find out 83% of those trying to activate technology in their supply chain and their operations were not seeing the benefits of that investment or the return on that investment. So that was a big shocker last year.

[00:04:17] I was hoping the number would come down significantly this year, but 69% are still saying the same thing. Knowing that that might be the case, we asked the follow-up question, why or why not? What are some of the root causes?

[00:04:35] And a significant number, I believe it was 56%, don't quote me on my numbers all the time, but a fair amount of them quoted at least two reasons why, which starts to target the complexity of what executives are facing as they try and navigate this sort of new world.

[00:04:57] They are trying to improve the way in which they're flying the plane, if you will, while they're flying it. And that just goes to show that these sort of initiatives, these pretty sometimes sizable investments aren't always easy to deliver on, if you will, from a summary standpoint.

[00:05:20] So that was a big deal. I'm always surprised at last year we had a bit of a contradiction. Yes, I'm very focused on digitizing or upscaling my workforce, but then it was the lowest priority of things they're investing in from a capability development standpoint.

[00:05:41] This year we saw a closer correlation, thank goodness. And then of course, sustainability and regulatory environments, we started seeing sustainability come back on the map, if you will. I think we lost sight of that a bit during COVID in the spirit of just trying to get

[00:06:00] to the marketplace. But as regulation continues to come, I mean, it's always quite strong in Europe, but as it comes stateside here in the US, I think a lot more thinking seriously about how am I going to be able to respond to those regulatory requirements.

[00:06:20] As extreme as CSRG, but also even some of the regulatory requirements we're now starting to see pop up in the US. That's really interesting. I'm curious when it comes to critical supply chain in particular, why do you think certain

[00:06:34] technologies often get overlooked and how can operation leaders address prioritizing them moving forward to ensure we're not having a similar result next year? I think first of all, let's start with, if you're talking about supply chain, it's complicated anyway.

[00:06:50] Each one of the domains, if we use the classical definition of plan, source, make, deliver, each one of those domains is fairly significant in its own right. I think it's when you think about the technology that can enable it, optimize it, deliver value from it.

[00:07:08] I actually think it's not an overlooking of technology. In fact, there may be too much technology that's there. What I think is more the oversight or the miss, if you will, is the communications, the awareness, bringing people along in the journey that may be a little deficient, if

[00:07:34] you will, and ensuring that whatever technology is there, that we're actually using it. It's not only being used, it's actually being embraced, adopted, practiced, evolved, if you will. Those using the technology, if you will, are pushing for it to continue to evolve.

[00:07:56] If you're talking about within a particular area, I think how you need to focus in a business, again, going to that value chain prism is prioritizing what is most important or critical, mission critical for your business.

[00:08:13] If you are an asset heavy business, obviously making sure the utilization of those assets is a premium. So planning as well as things like digital twinning may be a critical investment you want to make. If you're a more service led organization, lots of customers, lots of end distribution

[00:08:33] points, certainly planning becomes critical, but maybe also route optimization or warehouse management software becomes real critical for you. I think in the past, a lot of these technology platforms haven't been super agile and user friendly.

[00:08:53] I think they've evolved tremendously now where there's a lot more, especially in the cloud, a lot more ease with which they can integrate or complement each other as we go. But again, pushing folks to know that they exist.

[00:09:08] I can't tell you how many clients we do projects for where it's like, oh, I didn't even know we had that tool. I didn't even know we had that capability. Creating awareness around it and obviously pushing to have the adoption happen is vital.

[00:09:23] What obstacles stand in the way, do you think, of technology investments, especially delivering the necessary results? I think a lot of people are chasing AI and so many different tech things. Oh goodness, yeah.

[00:09:34] But equally at the same time, there's a lot of challenges to do more with less. Any tech project or expensive tech project is expected to deliver ROI and generate business value, et cetera. What are you saying here? Yeah, yeah, for sure.

[00:09:51] So I think exactly as you're speaking to Neil, the complexity of the environments, depending on what your legacy environment has looked like, bringing new technology into that ecosystem can be quite complicated. The complexity around integration can be quite complicated, oftentimes daunting for companies.

[00:10:13] I think I'd be remiss if I didn't mention data. Neil, it comes up in every conversation, how good is the data that's going to flow through these systems? It can impact the effectiveness of these technologies. I think a lot of people buy via gut, right?

[00:10:34] I want a technology. I think this is going to solve a problem that I've identified. Let me go chase it. So I think the real why not root cause is the approach and sort of mental model you take, the mindset, if you will, you take.

[00:10:51] I do not want to say companies are not being strategic about their investments. I think there's a lot of good work that goes into thinking about where technology is needed and creating some plans around it. It's the sort of approach, though.

[00:11:08] You often see things like change management getting pushed aside. You often see users only coming in once we get to the testing portion or the actual activation portion, not further upstream in the sort of even work planning, let alone the design of how things are going to work.

[00:11:30] So truly bringing along the concept of you are going to evolve and potentially transform ways of working. So doing that hand in hand with the people that are going to be impacted by it are most critical.

[00:11:46] I think being outcomes focused, I think a lot of times we're addressing pain points or focused on particular use cases. I think that's a bit short-sighted at times. So being holistic and thinking through what are the outcomes you're trying to achieve

[00:12:04] and working that back through all the angles. Bring a bit of that systems thinking, and I don't mean technology systems, I mean interdependency systems thinking to the equation early on, I think is critical to ensuring that you can identify roadblocks as you go.

[00:12:22] You can evolve potentially the plan or pivot the plan but not change the outcome that you're trying to achieve as you go. So it does feel like a transformation, if you will, not an event where I'm activating a technology. Does that make sense? It really does.

[00:12:40] Especially as an exchange manager, I was getting flashbacks there for my IT class. I've got the scars to prove it. I've seen it so many times. It's the change management thing. And I think also people get obsessed with technology.

[00:12:56] At the moment, it's AI and everyone's trying to just get it over the line and get it in. It's very seldom the technology itself that makes it a success. It's the work culture, making sure everyone's on board and knows how to use it.

[00:13:09] And are there any tangible ways you think that business leaders can better upskill employees, ensure that their culture is ready and evolve their workforce and ensure that nobody gets left behind or people dig their heels in and think, I want nothing to do with that technology

[00:13:25] because it's so important to bring the workforce along, isn't it? Absolutely. Absolutely. Well, again, there is this, you know, as someone that's probably of an older generation, right? It does feel like sometimes this is happening to you, right? Or at you, right? Not with you and for you.

[00:13:45] So I do think, as I mentioned, bringing folks earlier along, including detractors, Neil, I think we always try and go about some of these activations with the people that are super users, right?

[00:13:59] Already have a sort of mental model and tech mindset to the nature in which they do their work. I think you have to bring along people that don't, right? And don't typically gravitate towards technology. As you go through this journey, they're going to be tremendously insightful in identifying

[00:14:18] this is why I don't know, or this is why I wouldn't use, or this is why I would never think of, right? As it pertains to the actual technology solution. So certainly bring in folks earlier on in the journey. Neil, I hope you don't find this disrespectful.

[00:14:35] Calling it change management, I find quite frustrating and actually undermines it, right? Makes it minimal, right? The whole journey is a change. You should be doing all the necessary steps to bring people along. I also think you have to reimagine this sort of traditional concepts like training.

[00:14:56] I don't think, I think we think of training as you sit in a room all day and people walk you through the process. And yeah, sometimes there's practicums in there to get your fingers embedded in on the keyboard and all that good stuff and practicing real time.

[00:15:14] But I do think we have to reimagine what the concept of quote training looks like. It is not an event. It's a continuous learning journey that should start when you sort of activate the project

[00:15:25] and continue long after the sort of go live clock has ticked, if you will. Those I think are some really critical things that need to happen. Empowerment probably is also the really big thing. Making sure people feel like this again is happening with them.

[00:15:45] But I say that cautiously, right? You need to penalize people that are not penalized, right? Whatever that may look like. People that are not adopting and using the technology. And that includes leaders, if you will.

[00:15:59] I had an executive recently say, I keep asking for a report I know we don't have rather than asking for the reports and the insights that I know we do have. Shame on me, right?

[00:16:13] And I think we have to make sure that we're balancing that a bit of the carrot and a bit of the stick, if you will. 100% with you on that. And another thing on the report that really stood out to me, especially I went to a lot

[00:16:26] of tech conferences last year and there's a lot of nervousness and anxious around AI. But of course, this year, almost all the respondents said their companies have at least a toe in the water when it comes to generative AI.

[00:16:38] But only 20% of those in the report admitted widespread use in operations and supply chain and benefits today have been largely uneven. So what factors lead to successful or failed AI integration? What do you think that is?

[00:16:56] I think I love the fact that first off, Neil, that everyone's sort of embracing it, right? And trying to figure out what this is and what it means. So that 70 would I translate to be behind that 70%, if you will, right?

[00:17:12] But the fact that only 20% of them are actually implementing it says to me anyway, that it's a lot of trial and error. It's a lot of like messing around in the water without necessarily swimming, if you will.

[00:17:28] And I do think that that's a byproduct of how we talk about AI is sort of that, you know, the end all be all, if you will, it's going to transform everything and a bit of

[00:17:40] a shine, if you will, a bit of a silver bullet kind of mentality to it. So I actually like the fact that companies are dabbling into it and trying to figure out what it may mean for them. The 70%, if you will.

[00:17:53] But what I'm hoping for is that it really means into a more purposeful strategy, right? What is it about your current environment, ecosystem, both the human capital and the technological capital that you have that needs some help, if you will?

[00:18:14] And be honest about where and how that AI can fit those gaps or create some bridges there for you, because there's a lot of potential for AI to do just that. What I worry about actually more what we try and talk a lot about is it's an augmentation,

[00:18:32] not a replacement. I think a big reason why a lot of organizations may be experiencing tissue rejection or, you know, a lot of false starts, if you will, is because it is being put forth. Hey, if I just apply AI, I can get rid of all these people.

[00:18:52] Or if I just apply AI, it will take out all of this work. Well, it really is supposed to be helping you with speed and accuracy and the sort of qualitative part of your metrics, not a wholesale replacement of humans and process and sort

[00:19:12] of ways of working, if you will. And I think that's the bridge we really have to make sure we land with AI, especially as we're going through the potential use cases of where AI can be most beneficial within a corporation.

[00:19:28] And if we look at the report one final time, we'll give the link at the end so people can find it themselves and have a good dig around in there and some of the insights.

[00:19:37] But was there anything else that really stood out for you or anything that you think we should mention that really stood out? I think we covered a lot of it, Neil. You would be remiss not to talk about why aren't these investments actually panning out

[00:19:52] and where does AI play? We didn't talk much about sustainability, which I think is another factor with sort of risk in this new terminology of resiliency, if you will. I guess the only thing we didn't touch upon that maybe is worth noting is this perpetual tension around firefighting.

[00:20:18] I'm in the here and now, I'm looking for, especially in supply chain, more cost level setting, cost cutting measures in productivity while I'm also trying to think about unlocking growth and being future proofed for future purpose and that evolution. That tension is real.

[00:20:40] We saw that in the report as well. My coaching and counsel around that is sort of the continuous dynamic shifting that we're experiencing is no longer an event, it is the environment we're in.

[00:20:56] One winning, sort of the productivity versus the unlocking of growth, they are not in conflict. They absolutely have to be in concert with each other because that's the world we live in. Supply chain has to be a critical seat at the table of unlocking growth.

[00:21:14] Yes, that does mean managing costs for sure, but that goes hand in hand with thinking about your future and where we're all going. Making sure that we're mindful of that tension, fully acknowledging it, but recognizing that our job now as operations leader is to deal with both.

[00:21:36] How do we do that? How do we do that effectively? How do we allow our technology to get us there with less friction, if you will, and better outcomes is what we're hoping to find.

[00:21:51] We mentioned a few moments ago about how change very often feels like it's something that happens to you almost. There is a pressure on all of us to be in a state of continuous learning.

[00:22:01] As someone right in the heart of this space, and you've got the air of so many different businesses, how or where do you self-educate to keep up to speed with everything and those trends?

[00:22:11] I suspect you've got access to a great team and lots of insights, but is there anything else that you do? We sure do. I think there's a couple of different ways. Obviously, in the firm, we're constantly putting forth content, not just about particular subject

[00:22:27] matters like AI, but obviously more broadly about megatrends and the evolution, frankly, of leadership. As executive leaders, what do we now have to be capable of doing and the difference between leaders and managers and that kind of thing? I do some exec ed.

[00:22:45] I engage in courses to augment the learning that I'm getting both within the firm as well as through client work. And then I also make sure that I am scouring good content from clients, from peers, from

[00:23:02] competitors to make sure that we're leveraging the ethos, if you will, of these changing times because it is dynamic. It's ever-evolving. So staying up with that can be really challenging when so time-constrained. So I'm hooked by Kirk.

[00:23:19] I will get and appreciate any and all information I can get my hands on. I should be better with podcasts, Neil. So to you, I'm going to do more of that. I like listening more to music when I'm in transit than more information, but I'm more

[00:23:36] of a reader, if you will. That's an objective of mine too is to invest more time in podcasts and webcasts and things of that nature. Love it. And you mentioned you're a big reader there and we are approaching the holiday season.

[00:23:48] So for anyone listening, is there a book in particular that you would recommend that we add to our Amazon wishlist? Maybe it'd help them self-educate and learn or maybe it's just a cracking read. What book would you like to add to our Amazon wishlist and why?

[00:24:02] So it may be a little too youthful for us on the phone here, but I just went to a... I'm a board member on a non-profit and they gave out a book by Desmond Hall. It's called Your Dark Corner, Your Corner Dark. And it's just a spectacular read.

[00:24:30] And I didn't quite finish it before last night. Desmond came and spoke to the kids at the school. And I didn't quite finish it. So I plan on finishing that guy. And then I was also recommended a book called James, which is just arriving on my doorstep

[00:24:49] just in time for the book reading here. It's a novel by Percival Everett. So those are my two most recent recommendations. Clearly not related to AI or technology though. Or operations. Love it. I will get both of them added to our Amazon wishlist.

[00:25:09] And for anyone listening, maybe they want to dig a little bit deeper on the report that we've mentioned today or just have a look around PWC website, which is huge. Is there anywhere in particular you'd like to point everyone listening if they want to

[00:25:21] check out PWC or indeed connect with you? Where would you like to point everyone? So if you go to pwc.com, type in digital trends and supply chain, you should find your way to our landing site.

[00:25:33] At the bottom of that, you will find all kinds of good contact information. Also, we can provide you access to a dashboard that allows you to take the survey results and sort of play with them for your respective industry to see bit more industry cuts.

[00:25:50] We should be posting industry cuts, the written version of the summary reports shortly. And I'm Carla.DeSantis at pwc.com. And happy to get any sort of outreaches whenever. Well, thank you so much for sitting down with me today.

[00:26:08] We covered so much from that PwC digital operations report, understanding why certain technologies get overlooked within critical supply chain. But although we talked a lot about technology, AI and implementing AI or the lack thereof. And I think it's also about people, isn't it?

[00:26:26] And bringing people along for the ride, ensuring that businesses upskill their employees to evolve their digital workforce and AI is augmenting them rather than replacing them. Because I think that is where the magic happens. But thanks so much for sharing that with me today. You bet.

[00:26:41] Well said, Neil. Thank you so much for having me. So a big thank you to Carla DeSantis. I'm left realizing that it's clear that the path to digital transformation in operations Yes, it's fraught with challenges, but also filled with opportunities for those who navigate it wisely.

[00:26:58] And insights gained from PwC's digital operations survey, I think they also highlight that critical need for a strategic and holistic approach, effective change management and of course, continuous learning. But how is your organization addressing some of the challenges that we've talked about today in your own digital journey?

[00:27:21] This podcast is not a monologue of me and a guest talking about our experiences. It only works well, I think, if we pool our resources, if you share your insights too. And that is why I'd love to hear your thoughts.

[00:27:34] So please email me techblogwriteroutlook.com, Twitter, LinkedIn, Instagram, just at Neil C Hughes. But please send in your thoughts, questions and anything else and stay connected with me for more discussions at the forefront of technology, innovation and that intersection with business.

[00:27:52] But until next time, let's together keep pushing the boundaries of what's possible. And I cordially invite you to join me in doing just that tomorrow. But thank you for listening today. And until next time, don't be a stranger.