Building a Future-Ready Supply Chain through Digitization, Sustainability, and Diversity

[Transcript]

Jan Griffiths: 00:03

Welcome to the Auto Supply Chain Prophets podcast, where we help you prepare for the future in the auto supply chain. I'm Jan Griffiths, your co-host and producer.

Cathy Fisher: 00:13

I'm Cathy Fisher, your podcast host. Our mission is to help automotive manufacturers recognize, prepare for, and profit from whatever comes next in the auto supply chain.

Terry Onica: 00:23

I'm Terry Onica. Your podcast host will be giving you best practices and key supply chain insights from industry leaders.

Jan Griffiths: 00:29

Because the auto supply chain is where the money is. Let's dive in.

Jan Griffiths: 00:37

Hello, and welcome to another episode of the Auto Supply Chain Prophets podcast. Let's go to my co-host this morning, Terry Onica. How are you, my friend?

Terry Onica: 00:46

I'm doing great. How about you?

Jan Griffiths: 00:48

Good. What do you been up to?

Terry Onica: 00:50

Well, I got a couple exciting things coming up. I'm going to be moderating a panel of women in EDI at the Odette Conference next month. And then I'm also going to be moderating a panel with BYD and Toyota talking about Just-in-Time inventory behind the times. So I'm really excited about that. That's two companies of very successful startups and Toyota. So I'm really anxious to hear the contrast between the two and their strategies.

Jan Griffiths: 01:18

BYD is everywhere. I was in Mexico in the summer, and BYD is all over Mexico. I was in the UK. They're all over Europe and the UK. I can't believe it. I mean, BYD it's just taken over. So you have BYD and Toyota on stage at the same time. That'll be all kinds of fun. Absolutely. And I'm going to be at Reuters to this year, I'm going to be moderating a session with the president of Karma Automotive that I am very much looking forward to because I just saw him at TEDx Detroit. So it really is conference season is in full bore in the metro Detroit area, that's for sure.

Terry Onica: 01:56

Absolutely.

Jan Griffiths: 01:57

Today, let's take a trip across the pond, shall we? Let's go to the UK. And today, we are thrilled to welcome to the show, Anthony Emery. Now, Anthony has a fabulous background for the role that he's in today. And let me give you just a snapshot, and you guys should check him out on LinkedIn. But he's got experience with DHL as an Operations Manager in automotive. He was the general manager and UK director for the Brink Group, which is also an automotive-related company. He was a plant manager with Toyota Shoe Show. So, now, you know, we've got logistics background, we've got manufacturing background. And if that wasn't enough, then he's Head of Logistics Operations for McLaren Automotive, that ought to be all kinds of fun, and Head of Supply Chain for Euro Master getting into the aftermarket. And now he leads the aftermarket group he is the Supply Chain and Logistics Director for PHINIA. For Europe, Middle East and Africa. Anthony, welcome to the show.

Anthony Emery: 03:07

Hi, thank you. That is a long intro, and it makes me realize how many places that work matters like logistic history as

Jan Griffiths: 03:14

But I love it because there's so much there, right? I love it when we see people with a really strong cross-functional background because, simply stated, you're just better able to make great business decisions. You don't make functional decisions. You make business decisions. And that's what we love about your background.

Anthony Emery: 03:34

Thank you.

Jan Griffiths: 03:34

Yeah, so tell us about PHINIA. PHINIA is not a name I'm familiar with. But then, as I was doing some research, I saw the BorgWarner connection, which causes where I started my career. So tell us a bit more about PHINIA.

Anthony Emery: 03:47

Technically, we're brand-new, Jan. So, PHINIA is around about 110 days old now. We spun off BorgWarner, so we're now our own legal entity, and we remain effectively doing what we did in the aftermarket sector. We incorporate the brands of Delphi, Delco Remy, and Hartridge we supply a fuel system and aftermarket solutions to the automotive sector. So we span the globe, we've got offices from the East to the West, and everywhere in the middle, we have our HQ sort of, set up for the aftermarket and war, which is where I'm based in the UK. And yeah, it's a really exciting time, we kind of get to take everything we had from BorgWarner as a really good platform for what we do as an organization, everything we do with our people, our product, or technology. And we get to build on that as PHINIA we can literally have this really rich history and then add exactly what we want to add to it. And this is the journey that we're on right now.

Jan Griffiths: 03:47

I love that. And you know this aftermarket. I was in aftermarket for a little bit. I touched aftermarket when I was in the break business, I was in a procurement role. And that is such a different animal, right? Yeah. What are some of the pain points the challenges of aftermarket as opposed to direct material, broad strokes?

Anthony Emery: 05:04

To me, it's possibly even more exciting than a drumbeat you'd get from OEM production. So OEM, you know, you get provided with a forecast, you can really plan ahead. It's all production-based. And we have these great big outlooks, there's continued stability, and safety stocks can be controlled, and everything can be accounted for, from an OES and after-sales perspective, it's always really tricky. So you try and hit an ideal forecast accuracy, and then sales go up, sales go down, global geopolitical events come along and really side-swipe you. And that has a huge impact on the demand pattern. So your algorithms and your impacts, your stuff, obviously, at the end of the day, you can end up with too much or too little. When you're dealing with, you know, many times raw materials to finish things, you can look at anything from 12 to 18 weeks plus shipping, then with it being product dependent, it's really hard to control. So the challenges aren't necessarily like do you have in OEM when you're working line back. It's really about having that predictive foresight, as well as working off your existing demand and planning and forecasting. So we can gather as much data as we like from around the car park, we can see what vehicles are on the road, how old they are. But it remains an ongoing challenge. And you need to support that by obviously developing and creating a skilled workforce, but also the systems you utilize alongside of that.

Terry Onica: 06:28

Anthony, I'm really curious, with all your background and in the aftermarket work that you're doing at PHINIA, as well as I know, you do some production as well too. What kind of strategy do you have for digitization of your supply chain?

Anthony Emery: 06:45

It's tough and is a strategy that moves continually, we have to as a company, now that we are PHINIA, we're developing a roadmap that looks towards critical business outcomes through the supply chain transformation, everything from purchasing, the physical logistics but also looking at how we implement a multi-year in strategic plan that actually is led by our supply chain strategy. So at the moment, we've got some legacy systems in place across the plants across our offices. So, we are currently utilizing a partnership with Celonis, who are looking at data mining across our existing systems. And it's proving really useful for our reporting for some of our foresight at the moment. Each plant that I went to shows that multi-tiered organizations have different systems. So trying to get out of almost a silo we're working on sometimes, depending on the operation, depending if it's manufacturing, supply chain, etc. It's very hard to choose one system end to end, which presents obviously a huge challenge. So from a digitization point of view, we need to look at how we expand not only our system capability from an individual plant or an individual office, but technology that can bring that together. So looking at that whole process, end to end, is something that is from my past and my career, it's always been one of those things like I want to see the start, I want to see the end of everything in between, and I want it yo marry up. And it's very hard to do that sometimes, depending on what sort of business model you operate, depending on how many countries you're in. So our IT team now we've taken some changes within the organization and the board, there's a real push on information, there's a real push on technology. But it's definitely our strategy to try and be able to link up these systems because it provides not only a clear view for us to support the integrated business planning, it actually allows us to be more efficient, it allows us to be more sustainable, and it allows us to stay ahead of where we want to be. So it's very early stages. But again, the systems we're looking at, and you'll be aware that obviously, we've had discussions with the likes of QAD and other companies to really actually say, can we match up all these little pieces to give ourselves an even bigger view of where we want to be?

Terry Onica: 09:16

Yeah, that enterprise visibility is so key right now in really getting away from manual efforts, which a lot of companies do to really get that visibility across the organization. There's no way you can do it without technology. You just can't do it fast enough, especially as quickly as we're moving in the industry and moving to the EVs, and I'm sure even in the aftermarket, you feel it with older cars out there that you're going to still have to support I just can't imagine how you could do it anyway, but really the strategy you're doing.

Anthony Emery: 09:54

It's ever-evolving. We still use spreadsheets sometimes. Then it is a staple bar of the business for us to be able to assess data sometimes. Now actually, instead of just saying we're going to move, we're actually gonna say we're gonna move, but in 3, 4, 5, or 6 years' time, this is also where we need to be. So we have to back that up from a resource and capability point of view as well.

Jan Griffiths: 10:09

You mentioned the word spreadsheet. I'm surprised Terry Onica didn't just come out of her chair come completely unglued. You mentioned spreadsheets, and she loses it, Anthony, she loses it. It's embarrassing.

Anthony Emery: 10:20

She's lost it with me before she's keeping a cool. Because we're being recorded.

Jan Griffiths: 10:23

I think you're right.

Anthony Emery: 10:24

She knows I hate them. She knows I like live data. So, we will move away from that we will have the system.

Jan Griffiths: 10:31

Step one is admitting you got a problem, right? So, kudos to you, Anthony, for first and for admitting it, right? Because a lot of people they use spreadsheets, and they're like, yeah, but I'm never going to admit to it. I know, it happens.

Anthony Emery: 10:42

I got guys in the team that are addicted to macros and VLOOKUPs,. So we need to kind of break that habit.

Terry Onica: 10:48

Admit it and not defend it.

Jan Griffiths: 10:50

Let's go a little deeper into this idea of demand planning and scenario planning. I cannot get my head around how you do that in the aftermarket. I just, I can't, what are some of the issues you're grappling with there? I mean, digitization of the supply chain is a very broad, broad statement. But when you start to really dial that in, go a little deeper for us, Anthony, in demand planning and scenario planning, what kinds of data do you have to include in this process?

Anthony Emery: 11:22

So we utilize a very open communication that we're between our teams. And we look at three things. So we look at our demand, we look at our consensus. And then we look at our sales forecasts and our long-term financial forecasts of where we need to be. When you are dealing with an OEM-style supply, you can forecast down to SKU-level parts, you can do it to the nut, and bolt, the injector, and everything in between. When you look at the aftermarket, and you look at product families and superfamilies, because that's where the market drives you. And that's that whole part of the integrated business plan, and you go from, you know, a reactive stage to an anticipation stage. Building it then into the business plan itself, we really have to kind of say, okay, we know that diesel product is still a really big seller for us. So we don't take the family. And we will say, this part, for me here, is super important to us in power in terms of our strategy. It's super important to our customers because we still have people all across, you know, the world buying it. And then we can sort of focus to certain areas. So we'll see, you know, Central Eastern Europe will take this particular product or the Nordics, and so on and so forth, will take another very specific products, then we have them look at, actually what part is that is an injector. And as you can imagine, cars all over the world have multiple pieces that are sometimes one mil difference, they might have a slightly different plug. So hitting that forecast if we can hit above 50% forecast accuracy is great if we can hit 60, 70, 80, it's been a brilliant month because we are hitting a moving target whilst bobbing up and down a boat in a rough sea. So, pushing that through continued open communication is the only way we went at it because even the algorithms can get it wrong. And, again, how do we give ourselves a solution without waiting for something to come along or spending, you know, a lot of time implementing that?

Terry Onica: 13:30

When you look at today's environment, sustainability plays a huge topic. And one of the things that I always think about is in the operations level at the plant, there are a lot of things that we could be doing every day that work towards helping the plant to be more sustainable for the organization. The more efficient we are, you know, the better we're going to be at sustainability. What are you doing at PHINIA in this area for sustainability?

Anthony Emery: 14:00

We do. So, sustainability, it touches so many things. And when people think sustainability, they think about the environment. And at PHINIA, yes, we have an environmental statement, we will look on a global model that actually allows local accountabilities. So our commitment, as a corporation, is to say, we're going to do our best for the environment. As a company, we also know that worldwide operations can't be controlled by one or two people sat in an office. So, we have to consider all the impacts that our manufacturing activities do, we have to consider all of our logistics or supply chain. And we again looked down not only on a global but a local level. So we can sit there as a team in one location, and we can identify different potential environmental impacts posed by that one location. We can then come together as a group and discuss it and say, actually, we seem to have a common theme in plants in maybe Mexico and then Romania and then China, and they might have something linked up, there might be something completely different. We then utilize those groups we get together, and we promote so many things that we know we can do without even thinking about it to help alongside that. So whether that's the efficient use of natural resources, whether it's energy emissions from either our carbon footprint or transport, minimizing things like water usage, and being able to protect biodiversity and cultural resources in and around the plants that we operate throughout the world. We also then look to know our carbon footprint when it comes to transport and we work very closely with some brilliant 3PLs. So we're utilizing, again, new technology and trips, we're making less flights, less journeys, but doing better milk runs, even down to packaging. So there are multiple legislations coming in across the world, where we look at actually, this particular type of product has to change the packaging, we have to change how many we ship. So whether it's creating smaller boxes, so we take up less room on a container, meaning we could fit more product in, how we dispose of certain products within our product market, and how we support those environmental legislations. We decide we take it at a local level, and then we come together as a global community to commit and maintain the environmental management system. So like I say, it's not just about sustainability and supply chain, it's sustainability and product marketing. It's sustainability in manufacturing the product. It's sustainability about, actually, how do we deal with it afterward, and how do we give that back and make sure that key stakeholders in the business externally, and most importantly, people within the world know that we're actually trying to make a change?

Terry Onica: 16:49

So tying sustainability back into your current project of where you're trying to manage demand, I'm sure you're trying to right-size inventory, when you go for justification of your project, are you highlighting that this really contributes towards sustainability? Is it to that point yet in the environment, I wonder if people are really thinking about this when they're looking at projects and the impact on the environment as a reason to do the project.

Anthony Emery: 17:12

I think it's definitely more conscious, especially when you see maybe an aging workforce making their way out and a younger workforce coming in, it comes to the front of their mind. So I've just come back from supply chain in Europe, and sustainability was one of the key topics of discussion throughout almost every presentation, and again, utilizing systems in that arena is a great idea, saying it is a great idea. But acting on it is very, very hard at the moment, I think because so many people want to be sustainable, but they don't know how to be sustainable. So embedding that as part of a company, you have to work with sustainability-specific roles, you have to have people who look to actually think you know what sustainability also equals cost saving and so in a lot of measures. And I don't think that companies always think, actually, if we shipped more products in one container, and we have less fresh air, that means we can get more, and it costs us less because we're actually making less runs. So, sustainability has a big impact on profit and cash flow within companies. So I think people need to make sure they're not only doing better for the environment but for themselves because the more money they make, the more we can put back in. And looking at what we do at the moment, we do work with agencies to look at our CO2 emissions. So we have the monitor that allows us to see it by the product, what the carbon footprint is for that product when it ships singularly by the hundreds by thousands. And again, through our packaging itself, its disposal, and that sustainability piece actually then extends to people like myself. So how many times do I travel to the office? How many times do I work hybrid? When I go on company travel, do I fly? Do I take the train? I took the train to Brussels. So I did a 90% reduction in carbon emissions through my journey. And for me, it was about actually I'd like to spend some time doing some work on the train, be able to relax then and then do something differently to flying, but pretty sure that's a reduction of my carbon footprint too. So again, it starts with the individual and to have that environment where you can actually allow people to come forward with those ideas is a really big part of how the organization will change and plan what it does.

Jan Griffiths: 19:42

It's a mindset switch, completely, isn't it? It really is. Talking about a mindset switch, D, E, and I, that's a subject that you're quite passionate about, isn't it? Tell us about that.

Anthony Emery: 20:00

Something that has consciously and unconsciously been in my mind, probably since I started my working life. So, I am Chair of our DE&I Council for PHINIA aftermarket. And I've worked with a few external organizations recently. The question is, why do you do it? Why do you choose to share this very important subject, and it comes from me from two specific sources. Number one, but by no means the most important, is past experiences. I am from a very small town in the UK, in the Midlands, I wouldn't say I had a sheltered life growing up, but I moved to a city when I was 20 years old. And that was sort of the start of a very rich cultural experience for me, seeing new people experiencing diverse backgrounds in people's approach to life. And that meant that the people I worked with and especially when I came into the world of logistics, came from this humongous, broad spectrum of something I had never even actually thought about before. And I also, in that environment, saw that people still have prejudices and that were still biased, whether it be consciously biased or unconsciously biased towards other people's beliefs, their skin tone, whether they're male, or female, whether they like Star Wars or Star Trek, you know. So it built this experience for me, and I never really cared where you were from, what you did, who you were, as long as you were good to people, that's fine. I want to take that and learn from some of the negative experiences and just really pass it on to people and the team. So now, that brings me into the D, E, & I role that I have in PHINIA. And secondly, when we when we talk about barriers, I never really understood male privilege. Until recently, I never understood white privilege until recently, I never understood what privilege was, because whenever it was talked about, be it on a LinkedIn post be in media, it actually made it sound like I had some sort of a hand up to what I was doing. And for me, I always thought I worked really hard to get where I was. And done not saying I haven't, but it was about the barriers, and it was about unconscious bias. And around at PHINIA, we do unconscious bias training, it's mandatory. So we know, actually, now, it's not a privilege, it's not something that's gifted to you. But it really it's about removing barriers for people who do actually have them. And the prime example I have at the moment, I have two daughters. They're both extremely fierce, but they're so different. If you cut me down the middle, one of them is my slightly lazy perfectionist. I'll put in some effort, and I know I'll get maximum results if I try just a little bit harder. The other one is the extreme other side of me, where I'm very meticulous sometimes. When you get driven down to that functional level, like we talked about earlier, she is so into detail. She's got an engineering brain. She's actually autistic, and she uses it like a superpower. Now, I also know that there is going to be a pulling where, yeah, maybe a barrier for her, either within our own beliefs or where someone might see that and think, oh, actually, you know, that's not something we may want to deal with as a company or a corporation. So I'm on a bit of a, I want to say, a one-man mission, it's not a one-man mission because I have an immense amount of support from my team, from PHINIA as an organization to actually try and change that perception of diversity, equity, and inclusion. It doesn't need to be a hot topic, it needs to be natural, and it needs to be organic, and that's what we're doing right now.

Terry Onica: 23:56

How do you bring more diversity into supply chain? And have you had any personal successes with that?

Anthony Emery: 24:02

We, again, we're still on such an early journey as PHINIA, but I think across my career, was this, a really easy way to do it is you looked at a CV sometimes if you're hiring, but I'm not talking about what you've got already within your company, but unconscious bias training is one thing. Actually testing yourselves in that arena is even bigger. And one of the things that's quite a hot topic on LinkedIn at the moment is the blind CV. We take the name, you take the age, you take the gender, you take everything away from the CV apart from the skill set, and then you're left with: Out of 10, does this person score on a skill set perspective? Does their personal mission statement actually say, yeah, this is a real good cultural fit. But beyond that, the cultural fit is a huge thing and that's how your diversity works. I believe in balance. And to me, parts of my career, I've run away with ideas. I've always thought I was right. And opening yourself as a leader and being vulnerable, being a servant leader, taking every little thing you've learned along the way actually helps you with that diversity. Because if you're open to criticism be open to improvement. And if you're open to improvement, you're creating a better working environment for people. So for us, we've got some good numbers when it comes to quality. Within our company, we have in specific, especially in my team, I have the "it's okay to challenge but also to be challenged approach." And that creates a culture. And when you create a culture, you can create diversity. So if I've done something wrong, I expect my team to come and tell me because they know that I am now that person who is like, you know what, yeah, I did make mistake and how we're going to rectify it? But also empowering your teams to make those choices as well. And giving people who may have had that barrier in their way before a chance to operate at a higher level, the chance to contribute more, than in itself just creates diversity. And like I say, it has to be organic, because you often see so many times where these initiatives and this diversity drive fails. Because it's like, okay, this is what we're gonna focus on this month. And that might not even be relevant to anyone within your organization. So making it relevant, making it fun, making it interactive, is a huge part of driving that. And then again, a safe space in the outlet to be able to do it, it lets people thrive. It's just like watering a plant.

Jan Griffiths: 26:43

Yeah, I love that. Yeah, it's great.

Terry Onica: 26:45

I love the blind CV, that's totally making everything level. That's a great idea. Anthony, can you tell us a little bit about what you're doing specifically with women in supply chain?

Anthony Emery: 26:59

Yeah, so obviously off the back of our DE&I initiatives, when I said we we'd love to keep it relevant, one of the first obvious and immediate things to look at was working with the women in our team. So I have had a number of lead roles within my organization recently, and out of the female applicants we've had 75% success rate, in applying for this positions. As an organization, we have 35% women throughout PHINIA, we have three women on the board, and two on the exec so we are making waves and we're going the right way. We're also part of the Boom Global Network, which is an online community for women in supply chain. It also provides them a platform, them a space to discuss and to learn more about their peers about the industry that they work in and that allows us to go out into you know, our own ecosystem, I actually say to our women in plan, our women in other offices, say, listen, have you spoken to our friend here in Warwick? She's currently just taking on the lead role. She'd like to know more about manufacturing. She'd like to get that sort of cross-pollination of experience. And we've provide almost like a mentorship program. So, and you can have, you know, we've got reverse mentors as well. So again, it really lets us drive a relevant part of the D, E, & I through the organization just through taking that one little section and saying listen to the future. So it's a new field, utilize that, let's train you and let's make you the leaders of tomorrow.

Jan Griffiths: 28:23

That's right. Anthony, our audience is typically automotive supply chain people. Given that those are the people who are listening to this podcast. What advice would you give them as we embrace this massive transformation in this industry? Specifically, let's be very targeted here, in the world of aftermarket, you're facing all kinds of challenges. But give us one piece of advice, something that you would recommend, given your tremendous amount of experience and the journey that you're on right now with PHINIA. One thing that leaders in supply chain in automotive could implement right now, what would that be?

Anthony Emery: 29:10

I was asked an almost similar question to this the other day. And the first thing that came to me was build your team and process like you're gonna get hit by a bus tomorrow. And it raised a few laughs, it raised a few eyebrows. But we spend a lot of time being complacent when things are going well. We think, right, it's going well, let's not change, okay, that's the way we've always done things. And that itself is a death sentence. Because I look now to my team, and I look, I think you're gonna be doing my job one day. I'm not afraid of that because I know that I will progress, I will move, I will retire, whatever. So I look at it, and I think you can be this, you've got the attributes. You're the next in line. You're the one who's going to take the throne. And then, I look at that from a process perspective as well, from a systems perspective, and that's how we grow. So, build your team, build your process, like you're gonna get hit by a bus tomorrow because when you're gone, you want them, your team, your company to be in its best and most optimal position, and that mentality then needs to go on through.

Jan Griffiths: 30:16

That is an excellent piece of advice. Anthony Emery, thank you so much for joining us today.

Anthony Emery: 30:22

Thank you for having me. It's been awesome.

Terry Onica: 30:24

Thanks, Anthony, for being with us today.

Jan Griffiths: 30:30

Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com To learn how, or click the link in the show notes below.