877: Building Trust for Digital Supply Chain Success W/ Mohit Ahuja

0:05Mohit Ahuja: Hi there, my name is Philip Leidson. I want to welcome you to the Art of Procurement podcast, the podcast that helps you, a forward-thinking procurement professional, position yourself and your team to proactively take advantage of the revolution that's taking place in procurement today. By interviewing industry trailblazers and sharing insights from our own experiences, my team and I pull back the curtain and shine a light on the strategies, tactics, and tools that procurement teams are using to elevate their impact. On today's show, I'm delighted to welcome Mohit Ahuja. Mohit is currently a strategy and transformation leader.

0:40He's an internal consultant at Caterpillar, but he's experienced across a number of different industries. Thanks to his background in operations management and continuous improvement, Mohit has led multi-million dollar initiatives to optimize supply chains, enhance efficiency and drive revenue growth. And we're talking today just about his experiences across a number of different roles throughout his career. So first of all, Mohit, thank you so much for joining me. Thank you, Philippe. Thanks for inviting me to the show. And the first question I always ask is, did you find procurement or did procurement find you?

1:11well that's a million dollar question um i would say it's both um i have a background in mechanical engineering i started my career as a hands-on design engineer who used to work with procurement eventually collaborating with them for strategic sourcing decisions but the biggest change came during my MBA when I came across the supply demand management equations. And ironically, at the same time, since I was doing it as an executive weekend MBA, I was also working full time for a manufacturer who happened to have a transformation going on regarding the supply chain management decisions. so the lessons learned from there from my management classes i was able to make them utilize at my workplace and learn a lot of valuable life lessons from there so i would say it's both procurement looked for me but at the same time my own career path got me to the procurement yeah um and and the a little bit opportunistic in the transformation that was happening, that you're able to apply some of those learnings from the exec MBA into kind of in real time.

2:36Yes. Now we want to talk a little bit today around digital transformation in supply chain. And I'd love to know your perspective of what are some of the top ways that you're actually seeing some of the emerging digital technology actually having an impact on how supply chains operate today? Well, the biggest opportunity or the change that I've been looking or experiencing in the last couple of years is how the companies are moving from being reactive to proactive. Because, say, you know, beginning COVID, we have been experiencing disruption as a norm with either geopolitics or tariffs or events like COVID, Seuss Canal, or as we speak today for the Strait of Hormuz, deception have become an operational reality.

3:36And operations need a quick response planning to be able to pivot and keep the flow and adding value towards the customer. So with that being said, the expectations from supply chain is now that operations need supply chain to be real time so that it enables real time decision making. and some of the digital tools such as predictive demand sensing digital twins have now enabled us in not only planning for the near future but also looking into three to five years in the future and plan accordingly. Yeah. So that's the biggest architectural change or shift I've seen in the supply chain tools. So you start to see tools that are more focused on the identification of risk and mitigation of risk and scenario planning, stress testing, things like that.

4:55Exactly. So anything that can help in providing an alert or making us aware of a deception before it happens and provide us ample time to have a quick response is actually adding value to the operations. And that's what the digital technology has made it possible today. Now, when you think about transformation and the implementation of new digital technologies, when it's in a manufacturing setting, do you find that you have to manage transformation differently when manufacturing is involved versus something that may be either in the indirect procurement space or it might be in kind of overall general business model transformation?

5:47you're actually touching things you know you're transforming where manufacturing is involved does that include a different level of complexity and considerations yes absolutely you know a manufacturing setting transformation requires a completely different playbook from the other areas and i would say this because in manufacturing we deal with people who have expertise with hands-on techniques and you have been using their guts in making some of those processes work for the companies asking them to move from a completely manual driven process to an automated process where a machine is now able to take decisions for you or able to recommend yeah it takes a lot of trust building with them also needs to build the solution that are anchored in the current ways of working because let's say you and i build a muscle over the last 20 30 years and suddenly we are asked to completely change the routine we are now in the limbo of whether to follow that or you know how do i pivot to the new routine in a flip of a switch and that's where the biggest challenge comes so in that lieu i would say an adaptive leadership framework that i have learned over the years has come handy in understanding how do i make a change or implement a change without challenging their loss, their personal loss of identity or personal of work.

7:38And that's what matters more in the manufacturing setup. Interesting. So, so what are some of the things, you know, in the playbook, so to speak, that you think about that helps you with the change management that's necessary in that setting? So in the manufacturing setting basically some of the things that i have to keep in mind is that the consequence of a disruption is actually immediate and expensive so when we talk about an quick it update to an erp system you know that didn't go well it not only disrupts your productivity but also results in multi-million dollar losses by disrupting the manufacturing floor and having to rework all the sequencing.

8:36And this is where most of the consultants and the technology leaders lose their credibility fast because they do not think that way. And I believe the best way to handle this is having the risk experience handy when you look into what needs to be transformed and in what sequence how can we build a virtual circle by focusing on something that has more impact but less risk and then once you have that win build another win on the top of it and that's how you transform from point A to point B rather than having an immediate flip of the switch. Do you find that there's more, what's the right way of saying it?

9:34I, hesitance to, to bring in new digital technologies in a manufacturing setting because of the possible impact of, of the, the implementation, not necessarily failing, but not, you know, being delayed or causing disruption that makes leaders a little bit more cautious to think, you know, I'm going to invest in new technologies that are specifically in manufacturing and supply chain versus something that they don't necessarily see that being as much of a risk in. So can you repeat the question? Yes, let me make a note at the time. And what I'm trying to, what I'm really trying to say, and I'll ask this again in a second, is, you know, I often see that when manufacturing is involved, procurement transformation in direct materials has been really lagging in the indirect space because companies are often really hesitant to rip out any systems that are related to manufacturing because of the risks involved in it going wrong.

10:36And so they tend not to do it. And so now we're dealing with 30-year-old tech stacks that you have no choice but to go and start to digitize, but there's a lot more caution in doing it because they're afraid of the downside risk. So it's really asking a question around that. No, and that's a true risk, actually, because in a manufacturing setting, And yes, transformation has been a laggard. Most of the companies, especially heavy equipment manufacturing companies, has had their fair share of technical debt that has actually been pulling back their ability to go the digital routing. So rather than us talk on it now, let me ask you the question.

11:27And I want to make sure we capture it. Oh, okay. of the interview. So let me just make a note of the time.

11:34Mohit Ahuja: Okay. So one of the things in my experience has definitely been in manufacturing. There's a little bit more hesitancy to drive digital transformation because of the downside risk of the impact on manufacturing. And I just wonder if that's something that you are seeing kind of in the real world still, or if you're seeing a little bit more openness now to transformation because we have all these pretty old legacy tech stacks that need to be renewed. That's actually a true reality on any production floor these days. Manufacturing being mostly the heavy equipment manufacturing being the laggard in the space of adoption to these digital boards and technologies have acquired a lot of bit of technical debt that is quite literally pulling back their capability or ability to go the completely autonomous workflows routing.

12:34So there's a lot of gap that needs to be bridged today. And leaders are now understanding that gap and are working towards filling or bridging that gap. The biggest challenge come is the workforce on the ground or the grassroots level that has yet to be trained and educated to first get from a completely manual driven process to a augmented process. And then from there being trained to manage upcoming technologies like an agent. And that's a big leap for any worker working in the manufacturing setup for the last, say, 20, 30 years. And that's why it's very important for a technology leader or an operations leader to develop a trust with their employees before they hop on to the journey.

13:40and keep them as a partner throughout the journey so that it doesn't feel like they're about to experience a change that's either going to kick them off the door or would require them to completely change the way they work. Because that's where the resistance starts coming in. And that kind of pushes back any effort that companies and leaders are putting in perspective. So based on my lesson that I've experienced, the best rule of thumb is as you hop out to these journeys storytelling and having right communications through different channels between leadership and the frontline workers is very plays a very important role in determining whether your transformation journey would be a failure or success.

14:31And that's what I've been more focused on. How do I channelize my communications going from top to bottom, as well as bringing the feedback from bottom to the top so that there is an understanding of how's the things going at both sides and both sides understands what are their pain points. Yeah. I think, you know, when we spoke before coming on air, you talked about the idea of having clear parameters, you know, in early engagement that is really a pillar of transformation. I wonder if you could talk a little bit about what that looks like in practice. No, absolutely. By clear parameters, actually what I've seen is, you know, in my early years of my career when I used to be the design engineer some of the practice I've seen as bringing procurement at a quite little stage what led or what came after that was either a mismanagement of expectations or delays in the product launches or a complete product disaster because the decisions were made in silos.

15:57And what I meant by clear expectations was procurement should be part of your team from day one so that they could understand why a decision for a certain material, for a certain technology for a certain manufacturing process is being taken and to educate the engineers on what's the current capability lies with their existing supplier base and if a new technology is required how what are the right expectations that the engineers as well as the the business resources should take into perspective when making those business cases Because towards the end, what happens is you spend engineering operations, business resources, spend a lot of time in bringing new products to test phase and then start bringing the procurement.

16:59And the procurement metrics are completely different from what the engineering and the business resources are being incentivized. And that mismatch leads to a complete chaos. So the clear expectations is coming in early into the process, having the right understanding of the capabilities that suppliers and the current supply network have, making the engineering and the operations aware of what they have in their box. And then if needed, be sure that if the teams are not heading into the right direction, be sure to push them back on certain assumptions and make them aware of the right criteria to be considered.

17:51Yeah, I think when I was in automotive and earlier in my career as a buyer, both for new product development, but also just as a commodity buyer. and I would think about all the times we looked at a bill of material and think what's the engineer thinking like does the engineer not care about cost you know is the engineer trying to design the gold-plated version of everything they can to make this be you know the the most perfect design you know possible without regard of cost and now we have sales on us as procurement telling us that we have to meet this this costing level which is impossible based on the design now I'm sure when you sit in the engineer seat the engineer is probably saying all kinds of things about procurement doesn't understand me and um you know that the pushback is not fair but it's because we don't really understand each other's worlds i think more than anything um i wonder it's you you i'll stop there because it looks like you you definitely got an opinion on that because i think that that probably there's a lot of uh misunderstanding of each other that drives um that creates issues through this process.

19:01You saw the smile on my face, right? Yeah. That's a true tussle between engineering and procurement. And being an engineer myself, I blame engineers as well, we tend to definitely, what we call it as the golden plating of any solution. Anything that's what the customer is willing to pay that creates value, we tend to over-engineer everything. And then the biggest pushback comes when the pricing discussion starts and now the marketing and other teams come in those conversations and say that, okay, the customer is not willing to pay more than this. So we have to keeping our margins to a certain levels.

19:51We need to have cost under so-and-so price range. And that's where the engineers start getting discouraged. Like, OK, we have designed for this purpose. And now you are telling us that we only want to deliver part of the solution. And that's the true tussle. And I'm sure there's a lot of pride that an engineer has in what they have designed to then be told that we just needed the right version of that. We didn't need the gold-plated version. Exactly. And that's where, I mean, things have improved from the time I started working in the industry. And today it's been 16 years since I graduated and, you know, been part of the industry.

20:40And definitely, you know, processes have improved. Now companies have learned the lessons of bringing the early engagements across cross-functional teams. So having the right understanding of the customer, what provides value to the customer through the channels of marketing and sales, you know, what capabilities do we have with our existing supplier base or our production? Those early conversations have definitely helped keeping engineering in check on what is being designed and what is being delivered to the customer. But yes, that has only been possible now with early engagements, going back to my point of setting the right clear expectations for each team to start coming in early and raising the voice when it's needed.

21:38Yeah. I got a couple of questions from that. are there things that as an engineer procurement can do to help you know kind of bridge that gap

21:56stop I would say stop completely focusing on cost optimization yeah and start thinking in terms of risk intelligence the world today does not need just the right deal or coming out of a negotiation or I would should not say world the operations do not need to just have a good pricing what it what matters to operations is having the right material at the right time at the right location to ensure the continuity of flow and delivering value to the customer. And this is where the resilience comes very handy. So start thinking in terms of whenever you're talking to a supplier, developing a new relationship, or even working around cost optimization through consolidation, think about how it would enhance your resiliency for the operations rather than just being a cost competitive because COVID has taught a valuable lesson to pretty much every manufacturing company that for merely focusing on cost would lead to a vulnerable supply chain network and And any incident such as COVID or as a matter of fact, from the last couple of years, we have seen every year and something new would lead to a disruption.

23:41So for a procurement, as a procurement person, if I am supposed to add value, I need to start looking into much how I am mitigating risk through the supplier network rather than just focusing on cost. Yeah. That makes total sense. Now, I want to start to wrap up to bring it back to digital transformation. And actually, one of the thoughts that was going, I said I had a couple of questions based on something you said a couple of months ago. So the other one was when we're thinking about this collaboration, you know, we've often worked in silos between engineering and procurement or engineering and procurement and sales.

24:22Are you seeing the emergence of technology that helps bridge that helps the collaboration between all sides? So it's not just, you know, have you got a better relationship and are you emailing each other or, you know, are you sitting next to each other or what that might look like? But are you seeing more collaboration tools actually being out there that you can utilize that can help at least facilitate some of that collaboration? There are definitely new tools that have been developed to enhance those collaborations. historically the the erp tools usually only were i would say operated by the procurement or anybody from the supply chain and to get a visibility on to what's the inventory on hand or what's being coming an engineer had to and send an email or you know there are very different levels that you I would have to go through to get that visibility yeah you know now with the new tools coming in place being an operations executive I get the visibility right in front of me through those dashboard but I always tell any tech leader or you know my team that visibility is not the end goal the end goal is how does that visibility enables me to take a quick decision yeah and the tools nowadays with the agents coming in place are making that I would say desire capability a reality because you know with agents coming in seeing those visibility making quick decisions on our behalf and we are providing recommendations to have a human intervention and with a quick human intervention keeping you know the right flow in perspective so that you have a quick pivot response that's a true reality now yeah um yeah because that's really that's why we we invest in some of these technologies right is to try and not just bring visibility but also what's the what decisions can be made that couldn't be made before or what exposure what what access to exposure visibility do you have that you didn't have before so you can actually start doing a lot more predictive planning around that or stress testing certain situations absolutely you know historically we have had blind spots in our communications or visibility with the new digital tools what they have done is they have bridged the gap to be able to make us aware of those blind spots and make a much more better informed decisions in a real time well mohei i want to thank you so much for joining me on the podcast today it's It's been a pleasure to talk to you, to learn a little bit more about your background and for you to share some of your experiences with our community.

27:24What I'll do is for anybody who'd like to reach out and connect with you directly, I'll put a link to your LinkedIn profile in the show notes for today's episode. So that will be artofprocurement.com slash podcast. For anyone listening, that's artofprocurement.com slash podcast. One last time, Mohit, thanks for your time today and thanks for joining us.

27:47Mohit Ahuja: If this episode struck a chord with you, please do send it to somebody. We grow here at Art of Procurement through word of mouth, and that would be really appreciated. You can also support us by giving us a thumbs up, a star rating, or a review wherever you listen to your podcasts. Since 2015, we've built the world's largest free resource for procurement professionals looking to elevate their impact. Our resources span podcasts like this, videos, blog posts, papers, and events. to join us on the inside and to ensure you never miss an episode a webinar event or a post please do subscribe to our weekly newsletter this week in procurement you can do that at artofprocurement.com slash subscribe that's artofprocurement.com slash subscribe thank you for joining us today and i look forward to seeing you again soon