Speed, Data, and Collaboration: QAD and AIAG on Automotive Supply Chains

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets podcast, and we are on a mission to bring you the latest insights and thought leaders leading the charge on supply chain transformation in our beloved automotive industry. This podcast is powered by QAD and AIAG. I'm Jan Griffiths, your host and producer. Let's meet your co-hosts.

[00:00:27] Jim Liegghio: I'm Jim Leggio from AIAG.

[00:00:29] Terry Onica: I'm Terry Onica from QAD. Let's dive in.

[00:00:36] Jan Griffiths: Welcome to the relaunch of the Auto Supply Chain Prophets podcast. Today, we're celebrating a milestone of over 10,000 downloads and a powerful new partnership with the support of two visionary organizations, QAD and AIAG. We're reigniting our mission. Stronger than ever. We're on a mission to help you, supply chain leaders, prepare for the future. And to kick things off, I can think of nothing better than to welcome to the show the CEOs of both organizations, Anton Chilton, CEO of QAD, and Matt Polman, CEO of AIAG. Anton, welcome to the show.

[00:01:31] Anton Chilton: Thank you, Jan. Absolutely delighted to be here and looking forward to the discussion today.

[00:01:35] Jan Griffiths: Great. Matt, welcome.

[00:01:38] Matt Pohlman: Likewise, very happy to be here and happy to be part of your relaunch.

[00:01:43] Jan Griffiths: Well, let's dive right in, shall we? Right in with a hard question. Anton, for you, what challenges do you see ahead of us in the auto industry for the supply chain? There are so many, but what do you see from your perspective?

[00:02:00] Anton Chilton: Jan, you're absolutely right; that was going to be my first response is where to start. And I think, first of all, coming from a company that just focuses entirely on manufacturing and supply chain challenges, we're very familiar with many of them. And I'd say, first of all, in automotive, they've got the same challenges as other manufacturers do around the world right now: uncertainty, disruption in supply—still, even all these years after the pandemic—economic uncertainty, PMIs around the world are struggling—we know the global PMI is below 50 right now; geopolitical issues, all those kinds of things. And then, I'd say, very specifically within the automotive industry, it's going through a complete transformation, isn't it?

And the ICE versus EV versus hydrogen, the emergence of players, all those kinds of things are contributing to the need for the automotive industry to constantly be able to respond in real-time to all these different pressures and challenges whilst doing what they do and making a profit while doing it. So, I think it really is; the biggest challenge for me is that almost strategic imperative to be able to respond and react in near real-time to the known challenges and those unknown challenges that we know are going to pop up and continue to pop up over the next few years.

[00:03:19] Jan Griffiths: Yeah, and that encompasses everything, doesn't it? It encompasses data, technology, people, processes, culture, you name it.

[00:03:27] Anton Chilton: Absolutely. That's one of the things that is a theme for us right now as a company is our industry manufacturing, and I think this is true in automotive as well, has been very focused and is very well known, actually, for its focus on efficiency in driving really at the forefront of that from a manufacturing industry perspective has been automotive, traditionally. Now, of course, as the focus of technology, and I'm pretty sure all the listeners are familiar with artificial intelligence and all of the, you know, the real benefit from that, but also the hype. But I think the one element that if you're really going to be able to adapt and react well in today's world is you have to become what we would call a fast fish, right? And what do I mean by that? Perhaps in the past, it might be thought that the big fish eat the small fish. And I think in today's world, what's different is it's the fast fish that eat the slow fish. Whether you're big or you're small, you've got to be a fast fish. And the only way you're going to be able to do that, we believe, is, yeah, you've got to apply technology and systems on top of best practice processes, but you really have to do that in the context of empowerment of people. Only when you're optimizing that balance of people, process, and systems, all working in harmony together, are you going to be able to be optimized and be able to be that fast fish, what we actually call an adaptive enterprise.

[00:04:48] Jan Griffiths: You're absolutely right. Matt, from your seat leading the AIAG organization, what challenges do you see ahead of us in the auto supply chain?

[00:04:58] Matt Pohlman: Thanks, Jan. I think Anton said it very well. It's about speed, it's about collaboration, it's about data, and all of those things are extremely, extremely important. You've got to understand your supply chain. You've got to understand where things are and where they connect. There are so many things, as he said, that are impacting us today. And you have to understand your data. You have to have real-time information. You got to understand all the various levels of the chain, and it's more than a chain; it's like this three-dimensional, four-dimensional kind of a chain that you have to understand, and you have to have the data, and you have to go fast. And I would say, as we evolve, how do we collaborate across all of those pieces? And how do you have the ability and the knowledge to be able to collaborate across all of those areas? Because without that, you're not going to survive. It's extremely important. So, I agree, you got to be a fast fish. I love the analogy. If you're fast, you're going to get there before others. You're going to understand that it's getting information before others. It's being able to collaborate and then have relationships that you can reach out and do something with those situations. So, I think those are all things that are going to impact us. Well said, Anthon.

[00:06:20] Jan Griffiths: Yeah. You both talk about speed, and we know it, right? And we compare the Chinese OEMs to the legacy OEMs. And we see the level of speed, the way that they're able to design, improve on that design, iterate, and put the product into the market. We see that happening. The competition is right there. It's knocking at our door. I was cleaning out my office the other day, and I found a binder from the days that I worked at AlliedSignal many, many years ago. In fact, I would say decades ago, actually. And it was called Total Quality Through Speed, and I was a trainer and they called it TQS—Total Quality Through Speed. And it was all about understanding a process, really a little bit around value stream mapping, but understanding the process, understanding how to get the information, how to look at the decision-making process, and streamline that process. If we had that basic understanding decades ago, why have we not been able to get ahead of the curve when it comes to speed and collaboration? Anton, what do you think?

[00:07:33] Anton Chilton: It's a really good point and really interesting and actually, in support of what you're saying, like, how have we not moved ahead, you know, Department of Labor statistics in the US show that actually, productivity in manufacturing in the US has been stagnant since 2010, so it has not improved. And that's despite all of the hype and the headlines that you hear around investment in automation, investment in technology, whether that was robotics, whether that's now AI, whatever that might be. And I think it's down to this one premise, which is the, you know because we've been focused on efficiency, we've seen people as a sort of bottleneck to that. So, the more that you can reduce the reliance on people, reduce their decision-making capability, and operate to standard and best practices, right? And as long as those practices don't need to change, that's great. But what we find ourselves today, I think, is we're in a period where those best practices do need to change, right?

You think back when globalization was the thing, efficient supply chains were okay because they always worked the way you wanted them to work. And yeah, you'd get the occasional hiccup and so on, but in today's world, you can't rely on those standards. So, there's no such thing as a standard supply network anymore. So, you have to be able to react in near real-time. And in order to be able to react, technology doesn't know what to do when the standard is broken, when there's an exception. AI is really powerful; it can tell you there's an exception really fast. And that's back to what Matt said earlier about getting data and visibility and all of that stuff. But AI isn't going to tell you what to do with that. And so, for me, the missing link and I'm sure there's more to it than this, but the missing link is empowering and enabling collaboration and decision-making based on the availability of really good data. And I think that's what's missing from enabling improvements in productivity and that speed that you're talking about there.

[00:09:26] Jan Griffiths: Anton, I asked you the question looking back as to why we haven't been able to do it. Matt, I'll ask you that question only looking forward. What will enable us to get our arms around this idea of speed and transparency?

[00:09:40] Matt Pohlman: If I just answered a little bit going back, I also think we've been worried about ourselves in that one layer down. We haven't been worried about the whole chain. And I think there's so many things changing now, whether it's regulations that are out there and things like forced labor and the upcoming tariffs; if you're not understanding where stuff's coming from, you're going to be in trouble, and you're going to not know that you're going to trouble until you're handcuffed already. So, I think that there's a big challenge there.

I think as we go forward, AIAG has been around for 42 years, and we do a good job of bringing people together. So, I think as we see issues, I think collaborating, working on data, getting people to share data, getting people to share things further down, trusting your partners, trusting the data. But I think that data is going to become, in addition to being in Anton's example earlier, I think being a fast fish is going to be important, but having data, having real-time data shared across multiple streams of material flow or supply chains, that's trusted, that's real. I think that's some of the next challenges that are going to see. But AIAG can bring folks together like that, and I think we've got a record of doing that. And then, finding out what those problems are and trying to figure out, okay, based on this problem, how do we solve it? So, I think there are a lot of people listening to your podcast, and things like that are going to help people understand that as well, but I think that I further stress collaboration and data are critical going forward.

[00:11:12] Jan Griffiths: Yeah. Matt, you said that AIAG has been around for over 40 years, and you used to be known as the compliance organization. The whole industry is going through a period of reinvention; you've had to reinvent yourself as an organization. Tell us a little bit about that.

[00:11:31] Matt Pohlman: I think there's a while that we were known as we helped create EDI going way back. But in the last few years, we've been mostly known as a quality standards organization. And I think that as the industry's moved on and we're doing EV and electronics and AI and many of the things Anton said, now, we're involved in the supply chain. We weren't relevant to what was currently happening. So, we had to get ourselves back relevant in the industry and make sure we were solving the problem. So, we're listening to our customers and our members differently now, and we're trying to make sure we're then taking those current issues, prioritizing them. And then, our strength is in getting our member companies together with their subject matter experts to solve those problems. It's collaboration. If we can get the right people in the industry together working on this, a common issue with the right subject matter experts, we can solve things.

The industry is changing more right now than it's changed in the last hundred years. I've heard that on your podcast and I've heard that multiple times. So, we have to be ready for that. We got to change how we manage. We got to culturally change how we do things. But if we get the right people together, that are subject matter experts, and allow them the room to really share. And then, we listen to them, and we put new best practices or standards out there so we can keep up with the change. We just got to make sure we can enable that, but it's going to require more and more from data and those pieces coming forward.

[00:13:01] Jan Griffiths: Yeah. And Anton, for you, reinvention for a technology company, what are some of the things that you've had to deal with?

[00:13:09] Anton Chilton: Yeah. In the technology and then in the software world in particular, right? I mean, change is a constant for everybody, but in the last few years, the pace of that change is incredible, and you look at the power of artificial intelligence today and the types of things that it's able to do. I recently saw one of the marketing people put a video together of me doing a presentation in fluent French in my tone of voice, and if he didn't know me that well, he wouldn't know it wasn't me. So, how do we take those kinds of examples and bring them into true value-added needle-moving concepts for our customers, right? So, it changes the role of what we do in a way; a lot of customers that I speak to today, we'll be talking about what do you have in the way of AI. How are you using AI? And because they see the future, they talk about digital transformation and they want to be involved in that. But it's really, I think our job is to help through our solutions and the way that we work with our customers translate that high level, well, we want to do digital transformation, and we want to apply AI to true value-added use cases that they can really rely on and put into practice. And I think that's how good technology companies are evolving is moving away from a complete focus on the technology for technology's sake to really, how do you apply that and get good results? Along the lines of what Matt was saying. So, for me, what's really powerful and what's coming up, and how are we changing and evolving? We're applying AI and what we call pragmatic use cases to deliver data in a consumable format in near real-time to empower people to make better decisions, right? And how are we having to evolve? Well, the capabilities of AI across all of the different systems are far stronger than they've ever been in the past. And so, we've needed to adapt our own technologies and our own capabilities to be able to harness the power of AI and do that and empower that decision making.

[00:15:04] Jan Griffiths: Anton, you are no stranger to AIAG. QAD and AIAG often to collaborate on initiatives. Why? Why would you do that?

[00:15:15] Anton Chilton: I think it goes back to our legacy, and we've not been around quite as long, but we were established in 1979, and we've only ever serviced the needs of the manufacturing and supply chain industries. And our goal then, and as is our goal now, is to really bring solutions that help our customers optimize their businesses for a combination of efficiency, effectiveness, resilience, and so on. And, you know, recognizing that in order to do that, you have to work with the best in the industry, you have to understand the industry inside out, you have to understand best practices, and you have to understand how the industry is evolving back to what Matt was saying before, you know, AIAG has had to reinvent itself because the industry is evolving so fast. And so, we're incredibly proud of our involvement and ongoing involvement with them to, first of all, share in their knowledge of best practices and how to apply that to make the supply chain more reliable, more efficient, and so on and so forth, more effective, but also to have our own input to that.

Almost a third of QAD's revenue comes from automotive tier-one suppliers. And so, we've got practical firsthand knowledge of what works, what doesn't work, and how well businesses do when they're using these methods from AIAG and applying those in the real world. And I'm just incredibly proud to be a part of that and to continue that relationship.

[00:16:36] Jan Griffiths: Yeah, I love that. Matt, why is it important to you and to AIAG to have people involved with the organization like QAD? Cause you had mentioned originally that you'd like to bring people to the party, bring people to the table, subject matter experts, members, OEMs, tier ones. Is this an example of that happening of you bringing people together?

[00:17:00] Matt Pohlman: This is a perfect example of that. And I would say it's wonderful to work with QAD and some of the folks that you have on your team and people like Terry Onica, who volunteers her time a lot. So, within AIAG, it's not just the OEMs and the tiers that we bring together that's where a lot of the problems exist, but to solve the real problems in the supply chain, as we described it earlier, you've got to get the people that are involved in the supply chain. So, we also oftentimes get people that are moving freight, we're going to have to get to do the full supply chain, we're going to have to get reverse logistics, and we're going to have to get folks that are worried about recycling, but it's also the data teams. When I think originally back when we were solving EDI and some of those things, we had to have the folks that are the IT providers involved. And even now, we're going to have to have IT folks involved. And that's why we use folks in companies like QAD to help. They volunteer their time. We get their subject matter experts. They're just involved. Oftentimes, if we're going to solve things today, as Anton said, it's going to have some element of AI. There's going to be a systems connection to that. If there's regulatory issues, all of those things, in order to have the solution, you're going to have to come up with a common piece. But how does that then fit back into everybody's supply chain in a standard unified way if you don't get the systems providers and or the universities that are out there teaching? So, every element of the supply chain needs to have representation at the table. And that's why we use QAD and others to help us.

[00:18:33] Jan Griffiths: Yeah. And I was just at the auto show, and I was listening to Governor Gretchen Whitmer, governor of Michigan, and she was talking about the automotive ecosystem. And I think that so often we throw that around as if it's just a term, you know? "Oh, yeah, ecosystem, okay." But it's very powerful because it means exactly what you just said, Matt. It is about connecting all different types of organizations that perhaps previously were not connected or didn't have a relationship. I know when I worked in the supply chain, I didn't have much of a relationship with the world of academia or somebody who was impacting policy or different types of organizations. I don't know that I would have even thought about it. That type of thinking no longer flies. It is an ecosystem, and it is about coming together, making decisions with real-time data, responding, being proactive, not reactive, and moving forward, isn't it?

[00:19:26] Matt Pohlman: Very much so. It involves the government. We involve sometimes with customs. We just had an event on customs. We had Mexico, Canada, and US customs folks in the room because they're dealing with problems, and if we're not getting the industry together to solve the common challenges, we're going to be further away from what we're trying to do. So, again, how do you go fast? How do you be that fast fish? You got to connect the data through that whole piece. I'll keep coming back. I think Anton had a great analogy there.

[00:19:54] Jan Griffiths: That's what this podcast is all about: it's about sharing, it's about collaboration, it's about putting a spotlight on people and organizations who truly get it, who have good practices so that our audience leaders in the supply chain can hear these stories in a nice, easy way to listen. When you're walking, doing errands, or going to the gym, you can listen to these stories cause storytelling; I'm a firm believer in where it's at. People don't want to read corporate emails. They don't want to read sales bulletins. They want to hear real stories from real people. And that's what we're all about. And it's great that we're actually walking the talk here today with the three of us coming together for this podcast because this is what this is. This is collaboration. So, let's take a look into the future, and I'd like to ask both of you. Anton, I'll start with you. What do you think the theme of the automotive supply chain will be in 2025?

[00:20:59] Anton Chilton: I think 2025 and beyond, it's very much back to what Matt said about collaboration, right? And I think also back to your question about speed, and where have we gone wrong in the past, and what do we need to do right in the future? And to me, it's all about a focus on the people inside your organization and not just the people inside your organization, but all those that you interact with in, you know, what you described as the ecosystem just now.

It's not just about the focus on the people, but it's about applying the technologies in the context of best practices to empower people to make rapid decisions in real-time when things go wrong when exceptions pop up, and so on. So, how do you truly get collaborative? You've got to be served the data that you need at the time that you need it, and you've got to be able to rely on it, right? And then, you've got to empower the people to make decisions. And I think getting out of the functional silos that many people have existed in for all these times, getting out of the headspace of we follow this practice, because this is what we've always done, and making sure that you're working together collectively to improve.

And it was interesting coming back to that productivity stagnation that I talked about earlier. An article came out from McKinsey or actually research came out from McKinsey last year that was looking at why that might be, and actually, it reinforced a lot of the concepts that I just talked about, which was it's really about people behaving differently. So, empowered people. And they talk about going from silos to integrated workforces, right? And that's integrated internally, but also integrated with those that you collaborate with outside of your environment, going from control to empowerment. So, hey, we're controlling how you do these processes, too. We're empowering you to make decisions based on great data, as Matt said earlier, right? And collaborate around that and make much faster decisions. Putting the control in the hands of the people who are at the coalface doing the work, who know and understand the realities of what they have to deal with every single day. And then, evolving from being masters of processes to masters of continuous improvement in the context of those processes.

So, there was more to it than that. But I think, for me, that if there's one imperative, it's really, you know, everybody picks their heads up. Everybody looks for data that they need in real-time, and everybody needs to understand their role in the cog in this big machine of the supply chain and the ecosystem they're operating in. And that they collaborate with each other based on the accurate, reliable data that they're getting in real time.

[00:23:25] Jan Griffiths: Yeah. And if there's one action, Anton, that our audience could take right now, one thing that they could do right now to help them prepare for the future, what would that be?

[00:23:36] Anton Chilton: I think, one thing, I'm not sure that there's a magic bullet, but my appeal would be to recognize the importance of the people in your plans. So, everybody's talking about digital transformation and the automation of supply chain and data and all that. Great. And I'm from a technology company, I'm always going to advocate that. But put your people first, think about how you're empowering your people to make these decisions to become that fast fish. So, put people at the forefront of your planning, enable and empower them.

[00:24:09] Jan Griffiths: I like that. Matt, what do you see as the challenges ahead for the supply chain for 2025?

[00:24:15] Matt Pohlman: There's a lot, it's significant, right? Dating myself being in the industry for 40-plus years, but you always think change, you can get around it and solve it, but there's always something new. There's always some challenge. There's always a typhoon or hurricanes. It's a real challenge that's out there. But I think a theme as we go into this year is how do we make sure that we're able to deal with change when it presents itself, right? Do you have a plan? And when you get smacked in the face, how do you react to that? We're going to have tariffs and there's uncertainty with that. The whole electrification piece continues to radically change, and three years from now, technologies that we haven't thought about are going to be taking the place of as many of the things that are here now. I think we just have to be able to adjust and be able to deal with them. But to me, a collaboration, I mentioned collaboration earlier, I think radical collaboration across the industry, I think those are going to be some of the things that we will learn about and deal with, and we're going to have to trust each other and work with ourselves. We're going to have to let people, as Anton said, how do you entrust them to make the decisions in real-time when it's happening and don't have everything bubble up? That's a new type of management. And Jan, you talk about those things all the time, but we're going to have to trust our folks. We're going to have to enable them with data and then trust them to make the right decisions based on the parameters and the things that you put together. But digitalization is going to be there, regulations with sustainability and carbon footprint and forced labor. The requirements are becoming more and more intense and how you use that data to be a competitive advantage is also going to be very important. The data is going to be something that will become a competitive advantage as we go forward because it's going to require you to go fast. And if you don't have those fast answers, you could be in trouble.

[00:26:11] Jan Griffiths: Matt, one action that you would recommend that our listeners take right now to help prepare themselves for the future, what would that be?

[00:26:20] Matt Pohlman: So, in unprecedented times, I would make sure that you're finding a way to understand your value stream, understanding what your value stream, your supply chain is made up of. Again, as I said earlier, there's multiple layers in this. This isn't one dimension. This is multiple dimensions. And how do you make sure you're understanding that all the way down to where it comes out of the ground and then to at the other end too when it's recycled and then put back into the value stream, you're going to have to understand that piece of it collaboratively and with data. And I think that being resilient, as you're understanding that, how do you make sure you're resilient in your supply chain, being proactive, having data and stuff that allows you to be proactive, not reactive, proactive in how you're managing things because if you have the right data and the right information, you can be proactive and make better decisions on how you would go forward. So, that's a collaborative piece, and how you look at that in a multi-dimension piece would be, how do you get there? It's not easy, but how do you get to that?

[00:27:25] Jan Griffiths: Yeah. And I would like to add to that, don't be complacent. So many companies out there are complacent. The way that they've done things has served them well to this point, and so they don't feel the need for reinvention. I would say question everything. And to our audience out there, if you have questions, if there are subject matter experts that you want us to bring on the show, we will absolutely do that. We are a mission-driven podcast. We want to provide you with the content that will help you be successful. And I'm thrilled that the Auto Supply Chain Prophets podcast is now powered by two organizations, QAD and AIAG. Matt, thank you so much for joining us today.

[00:28:16] Matt Pohlman: It's a privilege to be here, and I am so excited about partnering with QAD and helping this podcast be successful.

[00:28:22] Jan Griffiths: Great. Anton, thank you again for being with us today.

[00:28:26] Anton Chilton: Absolutely. Thank you, Jan. Thank you, Matt. A pleasure to be on here with you, and yeah, I look forward to continuing the support and continuing our involvement with AIAG, of course.

[00:28:35] Jan Griffiths: Yeah, and here's to the next 10,000 downloads.

We love to hear from our listeners; reach out to any one of us; our contact information is in the show notes. And if you want to dive deeper into our content, check out our website at autosupplychainprophets.com.