Data Chaos to Clarity: How AI is Transforming Supply Chain Ops

Speakers

Hosts: Sarah Garrison & Shireen Garrison
Guests: Hannah Kain & Peter Bolstorff

Shireen Garrison – 00:09
Welcome to Smart Supply Chain, a podcast for supply chain professionals who think and work smarter. I’m your host. Shireen Garrison, along with my sister in supply chain. Sarah Garrison. Hi, Sarah.

Sarah Garrison – 00:21
Hi, Shireen.

Shireen Garrison – 00:22
Today we are talking about talent development at the intersection of supply chain excellence, artificial intelligence and digital transformation. Our expert we’re discussing this topic with today is Peter Bolstorff. Peter is a supply chain management expert. He’s certified in transformation for supply chain. He’s a certified supply chain professional and a score professional. Peter is a successful entrepreneur, community volunteer and supply chain management executive with more than 30 years of collective experience. He’s currently the founder and chief executive officer of his third startup. Inspire sce.ai Peter, welcome to Smart Supply Chain.

Peter Bolstorff – 01:03
It is a pleasure to be here. I look forward to our talk. Excellent.

Shireen Garrison – 01:06
Thank you so much for coming. Tell us a little bit about your new startup. InspireSCE.ai What do you do there?

Peter Bolstorff – 01:13
Well, let me talk a little bit about my background, because, again, everything’s a story that has a build up right? My basic degree is mathematics education and psychology and so again, like most folks my age in supplychain, we didn’t start there. So most of us learn supply chain through the school of hard knocks. So as part of the volunteer community, I got engaged with the supply chain council back in 1996 who was, of course, the author of the supply chain operations reference model, and again. From there, the rest is history, which we’ll talk about in a minute, but going back to the startup, so education and lifelong learning is really core to kind ofwho I am. And as we think about the convergence of these three big ideas, artificial intelligence, supply chain excellence, which has some proven things around it, and then digital transformation, we need to know more faster. And so this startup was developed to be able to provide education and micro bites, to be able to help our supply chains leaders out there cope with the speed of change.

Sarah Garrison – 02:13
Peter, thanks for being here. This is Sarah. Tell us about your history with the score model.

Peter Bolstorff – 02:19
So again, I was with 3m animation at the time, so by domain expertise, I’m a plan and a transformer make guy that goes all the way back then and at the time, in 1996 when the model was first launched by the Supply Chain Council, I was given the assignment of being the process manager for global planning for a company spun off from 3M called a nation and when we figured out we had to implement Oracle, all of the consulting resources went there. And there was a small group of us, center of excellence folks at that time who were tasked with really re engineering the end to end supply chain, process wise for the company. And that’s really where, again, I embraced the score model because this, at the time, was really and still is the only end to end process model for supply chain. And how do you measure one? So those of you that aren’t familiar, score DS, digital standard is the new version of it, and you can find it at score.ascm.org There is no login required.

Sarah Garrison – 03:22
Excellent. I mean, that is super exciting, because you guys were developing something that didn’t exist that really helped drive a bunch of innovation within the industry. And I think lots of us feel like we didn’t get an opportunity to do that. And AI really does bring that opportunity for people within supply chain. Tell us, like, how AI is impacting.

Peter Bolstorff – 03:44
It’s probably easier to say, how is it not impacting, right? So you know, if I had to think about one word, you know, in terms of how AI is impacting supply chain, to me, the word is automation. Again, if you think personally, there are a lot of different applications in terms of personal branding, writing papers, doing research, you know. So from a personal standpoint, kind of like, you know, all of the personal you know, between Apple and Amazon, you know, those personal assistants. So you mean, like, individual, right? And if I say the lady’s name, she’s right to my left, she’s going to start interrupting our podcast. So I’m not going to say the name out loud, right? So I think people individually are progressing at a faster pace with Gen AI and AI things than the profession or B2B. But when we think about B2B automation, it cuts across just about everything, process, practice, performance, data, technology, and, of course, people, and we’ll talk about that in a little bit. So again, I think the idea is it’s it’s changing, it’s coming faster, and you’re seeing automations, you know. All over the place, and not just in one process, in all processes.

Sarah Garrison – 05:04
Okay? So it’s about automation within the supply chain. What specifically is trending?

Peter Bolstorff – 05:10
So if you think about, if you think about the different aspects, I’m going to rattle off about seven or so as we think about this. So if you think about demand forecasting and planning, right? So all supply chains have to do some aspect of this one. AI algorithms are helping bring historical sales data outside in, market trends and other pieces of data together to really generate a better forecast, value add and again, using lots of outside in types of data, inventory management. So AI is being able to use transactional data to monitor real time inventory consumption and automating reordering processes and those kinds of things. When you think about supplier selection and procurement, AI is helping evaluate supplier performance, which gives purchasing professionals more informed procurement decisions. They’re also streamlining purchase orders and contract management. Again, you heard the idea of smart contracts, production and scheduling and optimization. So when you think about optimizing production schedules, you’re using a lot of math to be able to come up with what are the optimal schedules to increase manufacturing efficiency, logistics and transport management. So again, lots of stuff going on. There lots of things in the paper that you can read around route optimization, how you can use AI to automate load quotes, load tendering and things of that nature, quality control. So how do you leverage AI to do a more holistic approach to defect analysis and detection, automated inspections, etc, customer service. So how do we use chat bots and virtual assistants to handle customer inquiries, processing orders and other real time updates? Again, all of us have experienced that with, you know, ordering something from Amazon and then the last one, then is really this whole idea around risk management compliance, is, how do I set up AI structures so that I can kind of assess outside in activities for potential risks disruptions using, you know, weather patterns or other things that that are out there. So as I said, the list is quite long, and every day you see an announcement that adds to the list, either terms of making it wider or making it deeper.

Sarah Garrison – 07:29
Okay, I want to do all of those things in AI that sounds amazing.

Peter Bolstorff – 07:35
Great.

Sarah Garrison – 07:36
How do, how do I, how do I tactically get started? How do you, how does an organization create an AI program to start looking at process flows and automation opportunities?

Peter Bolstorff – 07:47
Well, that’s a great question. So I’m always one to use monikers. So my moniker is, think big, act small. And so a lot of folks in terms of, you know the act small is, how do I really think about governing change, governing AI and supply chain as part of my supply chain strategy that is opposed to seeing the most recent, you know, advertisement that says, hey, automate this, you know, and people going out and buying the technology and then trying to automate it, you know, without understanding The risks associated with doing that. So again, my advice to anybody who’s thinking about getting started, think big. It’s common or it’s here, but act small. And again, if the eight things you know to think about, think about governance, how do we kind of teach everybody the foundations of what AI is and understanding the impacts on people. What is an AI development cycle look like relative to our company or our supply chain? We’re going to start here and we’re going to go here. Are we going to develop our own language models, or are we just simply going to be using agents or tools from the outside in how do we protect our IP how do we think about those projects and systems. Do we have the right people to do that? Do we have the right measures of success? How do we make sure that AI systems comply with law? When we think about inherent biases, again, everybody would say our data is crappy now, and now we’re just hooking AI up to it, and it’s it’s still crappy. So the question is, is, how do we make sure we manage that better and then have an eye to the future in terms of, again, Europe or other places that we do business insupply chain, how do we make sure that we’re also understanding AI impact as it relates to that? One kind of the key things around AI governance that need to be considered. And people are just getting started with this. Most people have been approaching AI implementation, one use case at a time, right? So, so this, this governance things, is more of a holistic thing as it relates to our strategy.

Sarah Garrison – 09:50
And I think one of the things supply chain organizations are struggling with a little bit is how to think about the return on investment.

Peter Bolstorff – 09:58
Yes, they are. And I you know. So one of the things that we know is companies are only using about 30% of thetechnology that they bought, or the functionality they bought five years ago.

Sarah Garrison – 10:12
You mean, what they have already?

Peter Bolstorff – 10:14
They already have it, right? So they invested money five years ago in, let’s just say, 10 modules of a system, andthey’re only using about three and when you look at into the architecture, you still see Excel holding up large pieces of function. And so there’s this latent return on invested capital just laying there. And so the question becomes, well, how do I go from 30 to 80? And so what we found is, again, where models like score, process engineering and data engineering, Information Engineering, is what gets you from 30 to 80. And from a changemanagement standpoint, you know, it’s still complicated as always, but from a cost standpoint, it’s more about not investing anymore than I already have. It’s it’s about kind of re implementing the tool that I own and then optimizing my process to use what I have. So it’s a very systematic process. Again, it’s not magic. It’s hard work and but it’s but it’s real.

Shireen Garrison – 11:20
Is that why companies are using so little of this, this stuff that they’ve already purchased, is just because it’s hard? They don’t know how to put it together? What are you seeing in the trends?

Peter Bolstorff – 11:31
So if you think about why a company isn’t using their functionality, there’s probably a host of reasons. Number one is, again, if I go back to the data wasn’t very good, so we put the system on top of bad data, and we told somebody to ignore Excel. And yet, what’s coming out of the system isn’t very good. So they go back to Excel and they don’t maintain the data right. So this, it really goes back to data, and data quality, data integrity is one key component of that. The second reason is, again, there’s no, I’m going to call it walk the talk around. We’re not using Excel anymore. And I think it goes back to again, if you remember, back to the again, I’m a 3Mmember, right? So if you go back to the days where we had the post it notes, right? So if you really want to findout how something’s going, you just go look at somebody’s computer, and you look at their post it notes right in terms of how they order them from left to right, that’s probably how the process works, right? So, you know, if you just walk the process, you learn a lot. And I think the third thing is, is really, again, in any system implementation, what gets short changed, it’s training and change management. A lot of people underestimate, you know, the level of effort that you need to put into changing behavior. You know, folks have been doing it this other way for, for many, many years.

Sarah Garrison – 12:48
Hey, that’s a great point.

Shireen Garrison – 12:49
Yeah, change management is hard, especially with people. If they’re used to relying on the things that they know and they understand and nobody’s teaching them or showing them how to use something new, they’re gonna always revert, right? I mean, Excel is everybody’s weak spot.

Peter Bolstorff – 13:06
There was a funny picture I saw on LinkedIn. It had some of the best and brightest system application softwarenames, kind of like this one, and then little bitty at the bottom, standing on its corner, was a little bit of, you know, the Excel thing holding everything up, right? So if this little Excel icon fell away, then everything kind of falls.

Shireen Garrison – 13:30
We’re going to take a brief pause in our conversation with Peter Bolstorff, and we’ll be back with him shortly.

Sarah Garrison – 13:35
Hey, Shireen, Hannah Kain, our CEO just popped by, so I asked her to come in and join us for a quick conversation in our intermission. Welcome Hannah.

Hannah Kain – 13:43
Thank you. Glad to be here.

Sarah Garrison – 13:45
Hannah, many of our recent guests have mentioned tariffs as a disruptor in 2025 so we thought we’d get your thoughts. What are your top of mind perspectives on tariffs?

Hannah Kain – 13:54
So thanks for asking about tariffs. I predicted that 2025 was going to be the worst supply chain year. Yes, and that says a lot, because during the pandemic, we had some pretty bad years. So 2025 is not talking good, and tariffs and trade wars are really at the center of it. I read this survey in December that 83% of CEOs think that tariffs are going to impact the US economy and their companies hugely in 2025 and I would say, I agree, it’s just a major problem. It’s going to impact both the pricing of products. It’s going to impact where we get products from. It’s also potentially going to impact whether we can get products at all, and we’re starting to see that now.

Sarah Garrison – 14:45
Yeah, there’s so much uncertainty. So what are you doing proactively to stay up to speed?

Hannah Kain – 14:52
There’s a question about, do you have visibility to what happens? So that’s why we are so active in. Different trade associations such that we get instant updates. The news organizations also are on it. So certainly that’s agood source, but it’s not enough to know what’s going on. You need to be able to react to it, and our reaction isreally based on a couple of different things. It’s both having really strong supply network and be able to near source, near sourcing lowers the risk of disruption. It also lowers the risk of being impacted, at least directly by tariffs. And then, of course, it’s just having really great supply chain professionals in the organization being ableto shift really fast, and look up for our customers and for ALOM, frankly, also real time and understand what’s going on such that we can go to our customers with great solutions that help them be very effective in the marketplace. So agility has become the new superpower that the supply chain professionals need to have.

Shireen Garrison – 16:02
If you had to give one piece of advice, Hannah on companies looking into 2025 what would you tell them they should be thinking about in regards to tariffs?

Hannah Kain – 16:10
I think the long term, 26, 27, 28 advice is to think about near sourcing. Now, near sourcing may often take time, so that may not work for 2025 if you have not prepared for 2025 and tariffs, you may just have to take it on thechin. So if you’re not prepared for the tariff situation, it’s going to be very hard for you to mitigate it, unless you have a partner out there who already is looking out for you.

Shireen Garrison – 16:39
Wow, Hannah, there’s a lot going on there. There’s certainly a lot of uncertainty for the future, with so many potential disruptions. Tariffs is obviously a huge part of that. It sounds to me like we’re going to need to do a full podcast with you on this topic. At some point, I’m going to try to get on your schedule to have a chat aboutthat.

Hannah Kain – 16:55
Well, this is a huge topic, and certainly the trade wars themselves are also impacting us, as we are talking rightnow, we are already seeing impact on where minerals and other factors that are not just tariffs, but really frankly, down to the ability to get product into the US or to get them manufactured. And we are seeing that these trade wars are going to explode. So yeah, 2025 looks exciting, and not always positively exciting.

Shireen Garrison – 17:30
Lots of work to do. We look forward to it. Thanks for stopping by Hannah.

Hannah Kain – 17:34
My pleasure.

Shireen Garrison – 17:35
Now back to Peter Bolstorff on the Smart Supply Chain. So switching topics a little bit as we think about that people piece and how AI is going to impact the workforce. How do you think about, you know, what are the opportunities for new types of roles? How do people that are currently in the supply chain stay up to speed? What are your thoughts about that?

Peter Bolstorff – 17:56
Well, that’s, that’s what we’re doing research on right now at InspireSCE.ai is, what does that look like? What does that skill set look like? So again, when we think about the first thing is, again, if I think about back to score, right now, the score DS model will describe, orchestrate, plan, source, transform, order, fulfill and return again at those macro level processes. I think one of the interesting things as AI continues to automate, it aggregates those processes still more. So we’re still working through, what do those macro processes look like, order to cash, customer to delivery, source to settle so we’re still working on what does that aggregation look like, because, again, from an AI standpoint, it may aggregate across or up and down. So that’s the first thing, is figuring that out. The second thing, then, is, as you think about those macro level processes, what are the important roles to make sure that the AI is supporting the people or assisting the people in the right way. Again, you’ve seen in the in the recent news, this idea of the agents are coming, right, these personal assistants.And so the question is, are you fearing them? Are you welcoming them? And I think the difference is, do I know how I’m going to use them, and do I have a human in charge of managing them, right, like a handler? And so here’s some emerging AI rules, again, when you think about it, and you could apply that to forecast, replenishment, order to cash, source, to settle. I mean, you could apply it no matter what macro process you’re talking about. One is stakeholder experience. Okay, well, what do you mean by that? Stakeholder experience would be customer experience, supplier experience, analyst experience. So how do I manage the experience that your organization is providing with the AI process optimization, and not necessarily at the micro process, but at that macro transactional automation? So how do I automate orders? How do I allocate inventory those kinds of things. Data quality is huge. And again, master data, for those of you in supply chain, has been more of a you know, that’s not interesting. I think master data got upgraded in status when we started thinking about digital twins. I think now with AI, you know, at the center, data quality is really, really important.

Shireen Garrison – 20:22
It’s all about visibility. You have to be able to know what’s going on. And if you don’t have the right data, it can all go wrong, right, right?

Peter Bolstorff – 20:30
Or if the data is wrong, you get the the AI is happening. There’s a new one that’s part of data, but it’s specific to AI. And again, being a mathematician, I’m going to call it LLM large language model, vector integrity. What the heck is a vector? So the nearest I can tell a vector is kind of a mathematical expression or equation of data that captures meaning. So if we think about order to cache as a meaningful thing, then how do I look at the direction of that data, whether it’s customer, master data, ship to location, transactional history? So how do I put meaning to that data? So that if I ask the AI a question, it understands how to put things together? That is a new thing. You know, you think about data science, you’ve got ethics and compliance, going back to bias management, and then training and change management has to be critical if you don’t have like again, if you think about a macro process, you got to have somebody that has to own this idea around effective training. And again, that’s how you solve the cultural fear issue is making people informed. How are we going to manage the AI, as opposed to, how is the AI going to manage us? And then, well, and that’s the whole that’s the whole paranoia. Now, let’s be real. We’re a capitalistic society, right? So you know, anytime you can look for ways to become more effective and efficient, again, businesses are going to act on that. I think the most important thing as I look at the supply chain profession is, how do we start preparing folks to be able to do these roles and leverage the experience they have forward, you know, as opposed to not.

Sarah Garrison – 22:17
Yeah, and using our time to really add value. I really like this idea about looking at the macro process, because I think we tend to, in supply chain, focus on those tactical things. Like, okay, we’ll just go automate all the tactical things. But thinking about it from that macro level, I think, is really important when you’re thinking about AI, and it makes me think that looking at the score model could help you prioritize, where you start, when you’re starting the process, absolutely. So you talked about the cultural fear, and I think that’s a big one. You know, when I think about AI, it’s I think about the risk, I think about customer satisfaction, I think about all the things that could go wrong. How do you advise organizations to start kind of overcoming this fear?

Peter Bolstorff – 23:05
Well, again, I go back to education. I think again when we go back to teaching people, this is what we mean byartificial intelligence. So let’s turn off the reality TV for a moment, and let’s look at really what’s in front of us. Good AI governance always has humans in charge of the AI. Now, you may be doing something a little bit different than you’re doing today, but you know, it’s no different than ordering your groceries using the Amazonand then specifying to a delivery agent on how do I get it to my house? So you’re managing that process. You’re not literally getting in the car, driving to the grocery store, getting your groceries and bringing it back, but you’re still, again, stocking the fridge. And I think it’s important for for people to understand that still, humans are managing that now you may need a different tool set or a skill set. And I think that’s that’s really the first place to start, is really with education around what do you mean by AI? And then, how do effective organizations manage it?

Sarah Garrison – 24:06
I think it should make us all feel good that it requires this supply chain experience and deep understanding thatwe have. We’re just adding another skill on top.

Peter Bolstorff – 24:15
I think you hit it on the head for us as a profession. How do we leverage our experience forward, you know, so make one plus one three, as opposed to looking at it as a subtraction. You know, AI is coming in minus me, andI think that’s really the difference that we see in an AI first supply chain. People understand how it’s one plus one equals three, and how I’m going to have to learn how to use these AI agents, tools, you know, and things tomake my organization better and the customer experience or stakeholder experience better, yeah.

Shireen Garrison – 24:53
It’s one thing to make your internal processes better for your employees, but you do have to keep that idea of customer experience at the top of your head. We’re customer obsessed at ALOM. We want to make sure that we’re giving them everything that they need. So how do you make sure that the customer isn’t being negatively impacted by something that might really improve your internal processes?

Peter Bolstorff – 25:14
Well, so let me come back. So again, full transparency, I had the opportunity to work in a supply chain excellence workshop along a long time ago with ALOM, and it was the first time that I had seen perfect order fulfillment actually being measured and managed. The true definition of what do we mean by a perfect order, you know, from a customer point of view. So ALOM has, you know, that’s in your culture, that’s in your that’s in your DNA, and so when you think about your approach to anything, it’s going to be, how do we make sure whatever we do positively impacts that perfect order? And I think that’s the important thing about governance,is if we’re going to be process centric around our AI governance. Then which automations and which technologies do we have to bring in that will do that and help free up resources to be even more customer focused, as opposed to, you know, how do I bring this in and then move people somewhere else. So I again, I think it’s cultural, and I think it really starts with the leadership of the organization. And again, you you have a model for that.

Shireen Garrison – 26:30
So if other organizations realize we’re really lagging in this area, we need to, we need to step up. How do they how do they leapfrog to the front of the pack.

Peter Bolstorff – 26:41
So I would say they’re going to leapfrog. They may not leapfrog to the front, but at least they’ll leapfrog to the first pack, right, you know. So as you see, you know, like the Tour de France, there’s always kind of the leader pack, that group, you know. So they’ll be able to leapfrog somewhere into that range. And I think it goes back with you have to understand and admit, where am I gapped today, and why am I gapped? And then you need to understand the importance of long term cultural investment. I’m going to call it, for lack of a better word. And so it can’t be just do as I say. It’s got to be do as I do, and it has to start at the top. If you bring in AI simply to take these jobs away and move them out of your organization, that’s going to resonate. So you may say, very well, hey, we’re, you know, a is going to help with the customer experience, but the first three things that you do eliminate jobs that’s going to that’s going to play into how your culture is going to evolve. I mean that and that that’s more than just AI, that’s, that’s, that’s anything, it’s just management practices.

Shireen Garrison – 27:47
It’s all connected,

Peter Bolstorff – 27:48
For sure.

Shireen Garrison – 27:49
So Peter, tell us a little bit. I know I was digging around on your site, and I I understand that you are doing some things around, some free community activities and some other training. Why don’t you tell us a little bit about that.

Peter Bolstorff – 28:02
Yeah. So when you think about InspireSCE – inspire supply chain excellence, and again, a lot of people use the .ai as AI Artificial Intelligence, actually, all in so when you think about supply chain excellence, all in-

Shireen Garrison – 28:16
Love that.

Peter Bolstorff – 28:17
Yeah. So I think that the big thing is, again, if you think about the reverse pyramid, the first thing that we want to do is we want to engage a community. It’s an open community around building out use cases at this talent, at the intersection of artificial intelligence, supply chain excellence and digital transformation. And so again, we’ve, we’ve just kicked our community off. We have good core group. It’s global. We have regional moderators. And the idea there is to bring use cases to bear, write a one page executive summary on a particular use case. Again, think big, act small. Our first one is going to be supply chain, process centric AI governance. And you know, so what do you mean by that, and what is the value to an organization? And these use cases will be tagged using Creative Commons, so they’ll be attributable to the community, but they’ll be shareable across and so again, I think that’s where we’re starting. The other two educational pieces that inspire sce.ai is focusing on is personal development, individual development around AI first supply chain strategy. And so you’ve got individual webinars, and we have a course starting in January, and then the second dimension, and then is really around benchmarking, you know, supply chains to admire, and then using that benchmark to actually then motivate people to rethink their AI first strategy, and we have a one day workshop for that.

Sarah Garrison – 29:48
Amazing resources.

Shireen Garrison – 29:50
And lots of people in supply chain like yourself didn’t start out going to school for supply chain. That’s not That’s not what you were studying in school. Same with both. And I, we didn’t start in supply chain, so I think there’s a lot of people who have just moved into this area and are curious to learn more. I think your new startup is a great place to start.

Peter Bolstorff – 30:11
Interestingly enough, I have as many visitors from the AI community and the finance community as I have fromthe supply chain community. So it’s been, again, trying to keep it simple, but again, as things progress, you know, everything kind of merges together. This idea around aggregation, around business so.

Shireen Garrison – 30:28
Well, there’s so many great learning resources on your site InspireSCE.ai and opportunities to be a part of the community, which we appreciate. I encourage everyone to go and take a look. That will have to be it as we’re almost out of time. But we do have one last question for you, Peter, and this is what we ask. A lot of people tell us what your favorite vacation is, or your best dream destination, what do you like to do in your off time?

Peter Bolstorff – 30:55
Well, I have two answers to that question, so my wife and I one of our favorite spots just to to unwind is on the Big Sur. And so we’re headed to Monterey Bay. We just love the area. It’s a it’s a peaceful place to hear the ocean, see wildlife and all that. So that’s that if I had to pick a destination to live a second home in I would pick, and these are from my Kiwi colleagues. I would pick New Zealand in a heartbeat. Yeah, I think about, I think about New Zealand. And I don’t mean to offend anybody with like California with no people. So it has amazing- it has amazing topology. I love the culture and lots of stuff to do there. Yeah. So there’s going to be some new year where my wife and I are going to be there for New Year’s Eve, and it’ll be the middle of summer.

Shireen Garrison – 31:51
Excellent, excellent. Thank you. Peter Bolstorff for joining us today on Smart Supply Chain. Thanks everyone forlistening. We’re the Garrison sisters. Catch you next time on Smart Supply Chain, check us out anytime alom.com.