Kerry Taylor on Supply Chain Resilience: Pandemic Preparation and Recovery

Jeff Kavanaugh: According to Resilinc, a supply chain mapping and risk monitoring company, the world's 1000 largest companies and their suppliers have over 12,000 facilities in COVID-19 quarantine areas, with the World Health Organization declaring COVID-19 a global pandemic, and the Australian National University predicting a best case global GDP loss of 2.4 trillion. Supply chain resilience is under the microscope more than ever. Kerry, thanks for joining under the special circumstances, which is a far cry from our normal in-person episodes. Talk about social distancing, you are joining by phone from your home outside London and I'm here in my home studio in the Dallas area. From your work responding to pandemics and other disruptions, what is the single most important factor in supply chain resilience?

Kerry Taylor: Thanks, Jeff. Good introduction. I would say the single most important factor is supply chain visibility itself. Even better, perhaps, supply chain traceability. It's not enough to look one step up or down in your supply chain. You need to know who your supplier supplies. How far upstream does the supply chain go? And how strong is your situational awareness in terms of where you sit in that chain?

Jeff Kavanaugh: And supply chain resilience is what we'll explore in today's conversation. Welcome to the Knowledge Institute podcast where we talk with thought leaders on business trends, deconstruct main ideas, and share their insights. I'm Jeff Kavanaugh, head of Infosys Knowledge Institute, and today we're here with Kerry Taylor, who's responsible for C-suite insights and global partnerships at the Infosys Knowledge Institute. Kerry has a background in mining, technology, security and analysis. Kerry's been with the Knowledge Institute since 2019. Previously, he worked with Sierra Leone's largest employer during the 2014 Ebola epidemic. Kerry, thanks so much for joining us.

Kerry Taylor: Thanks, Jeff. Appreciate it.

Jeff Kavanaugh: Let's explore this concept early on. What did you learn from the Ebola pandemic experience back in 2014?

Kerry Taylor: Okay. There were two key parts of that. There's Ebola and where it happened. Most people think they know about Ebola, but not many know about the where. Now, I was in Sierra Leone, which is a country on the West Coast of Africa. 7.3 million people. Dragging itself back from a long and protracted civil war. Very decent, God-fearing people. Life expectancy for men, 52, for women, 54. Kids get it even worse.

Sierra Leone, I believe, still has the worst infant mortality rate from malaria. I don't know what your health care premiums are, Jeff, but the average health care spend over there per capita is 240 bucks a year set against the global average 10 times that. So, this is a country that was just getting back on its feet by the time it was hit by Ebola. So what did I learn? Well, as the man said it was the best of times, it was the worst of times. It was the worst in time in terms of Mother Nature and an awful, villainous disease that it's an awful way to go.

And for nigh on six months, we were faced with escalating sense of dread on all week. It was horrible. It was like a movie. It was almost outside yourself. But that was offset by the fact it was the best of times because of human nature, human ingenuity, and in some cases, genuine courage in facing down and beating the call to action. Now, there were people who lost their lives, mostly the medics. They were the real unsung heroes. We don't remember their names, but I remember faces.

We've seen it recently in Wuhan. The medics who tried, who stayed to their posts and died and tried to blow the whistle. We've seen it in the past week in Italy, in the medics who have died. These, for me, were the real heroes, and they're the real heroes in what's going on today. But, what did we learn? Looking back, I think the best thing was we had the good fortune to have experienced previous misfortune. What do I mean by that?

Well, as I've already said, Sierra Leone has the highest infant mortality rate from malaria. How did that affect our company? Well, 25% of our workforce were afflicted by malaria every single year. We had to put in a rigorous process of policies to try and impact that. And it wasn't rocket science. It was wear long sleeves not short sleeves. Wear a hat. Take the medicine that we're giving you every day for free. And there was a tangible output in that intensive three months. Within three months, the impact was that malaria rates had gone negligible.

So not only was there an effect on the bottom line, which is great for a big mining company, but the most crucial thing looking back with regards to Ebola was we had won the trust of the 5000 Sierra Leoneans on the ground who were working with us. There was a trust between workforce and management. Okay, now, that was important because when we were facing Ebola, everything went wrong until it went right. The experts told us that it's going to stay in rural areas. It's not going to affect the cities. They were wrong. It was a classic case of generals fighting the previous war, not the current one. So they were wrong. Mistakes were made on all levels, even personally, but we learned from them very, very quickly.

Jeff Kavanaugh: Could you highlight one of the mistakes that someone recognized and how it was changed to improve the resilience of supply chain overall?

Kerry Taylor: All of us workers we lived in our own cargo. It was a metal room with air con, very Spartan conditions. When you're working in a mining environment you get very, very, very dirty very quickly. So we were on to clean it, and the cleaners come in from outside the wire every day. So we were effectively in the green zone where our mining company had the best medical facilities in country. But we had a large, I guess, transient workforce that was coming in and out of the green zone.

So what did we have to do? We had to effectively make a deal with our cleaners- respect our procedures, respect them. Come in, have your temperature taken. Wear the clothes that we're asking you to wear. Follow all of our procedures. Don't cut corners, otherwise, you will suffer or we will suffer, and you're going to lose your job and this company will go down. And what was at stake? We were the country's largest employer. We accounted at one point for about 50% of the country's GDP.

So if we went down, the country was facing the abyss yet again. So this was not just a systemic risk, but a country and regional risk, too, that started at something as lowly "as how the cleaners conducted themselves." What was the final output? I think about 14 and a half, 15,000 people in that country alone caught Ebola. Almost 4,000 died. We, in the country's largest employer, lost, I believe, one or two people. It sounds awful, but they lost their lives and contracted the disease when they were on leave, when they were out of the green zone.

So for those who were actually within the green zone, thanks to those policies and procedures, which everyone payed lip service to and acted upon, we lost zero people. We had a zero fatality rate. So for me, that was a definition, the very definition of resilience, the ability to bounce back from a large scale disruption on a macro level and a personal micro level.

Jeff Kavanaugh: Yeah. And it sounds like as well that it was the very unglamorous things, taking care of the details, being rigorous and at times being a little, authoritarian, but being very rigorous and structured to make sure. If you can apply that to, let's say, supply chain overall, it's worth noting that you and I are doing this podcast remotely because we are in the middle of the pandemic for coronavirus. There are several parallels to draw, especially given that you were in the thick of things before something that, like you said, most people don't really know what was going on and how you not just survived, but put things in place and overcame it. Supply chain connectivity or supply chain interdependence I think really came through, as you mentioned, with the World Trade Organization and China's emergence. I think the idea of resilience is even more so the idea to bounce back. Why is supply chain resilience important? And in today's global context, what does resilience really mean?

Kerry Taylor: Well, again, I think it means certain things. Before you talk about resilience, you need to talk about connectivity. And supply chain connectivity, let's face it, it's kept things moving since the widespread adoption of lean manufacturing or the adjusting time muddle pioneered by Toyota in the 70s. And even more so, it's gone into hyperdrive since China joined the World Trade Organization three months to the day after 9/11. So that's a connectivity.

But in terms of resilience, we've had to face greater efficiency, but vulnerability. In terms of connectivity, we've become more vulnerable to disruption as companies stockpile fewer materials forth and further away. Now, let me put some real world numbers on that, these are Bloomberg numbers. They uncovered the median Standard & Poor's company carry down 66 days of inventory. Allegedly, and don't quote me on this, Apple its only nine days. So you need a pretty resilient supply chain to protect that inventory.

So I guess supply chain resilience has kept us fed and watered, and done us up with medicines and iPhones through war and natural disaster. As I said previously, to me, the definition of resilience and supply chain resilience is the ability to bounce back from low scale disruption. But what have we done recently? Companies have been able to reboot and reroute their supply chains after SARS in 2003, the SARS outbreak, post Fukushima, after the volcanoes in Iceland closing entire European airspace. Even during the ongoing China-US trade war as we face the COVID-19 pandemic.

But I think most crucially, in recent years, which has probably gone below the radar of average people, supply chain resilience has boosted the growth of so-called intermediate trade. Now, what's intermediate trade? It's a trade between countries that aren't the origin of the raw material nor the destination of the final product. And it's that supply chain resilience that has added massive incremental growth to global GDP in terms of intermediate trade.

So that's looking over our shoulder. That's answering, what has it done? But you're asking about today's global context too. I guess if I take that over literally, literally today in the face of a pandemic, supply chain resilience might be about survival itself. Pharma companies, for example, pharma companies supplies were rerouted to Wuhan when the pandemic kicked off. In Europe in the past week, Chinese ventilators had been airlifted to Italy to address the Italy's chronic medical shortages since the pandemic overwhelmed Italian healthcare system.

So today I'm taking it literally, but it's a matter of life and death. Now, if I can use my crystal ball and look into the future, what's going to happen after all this pans out when we get back to "the new normal?” I think supply chain resilience would increasingly merge with supply chain traceability or visibility, the desire and ability to see all the way upstream in the supply chain, and not just your immediate supplier or maybe their supplier in turn. Now, as a typical nerdy consultant, I hold this truth to be self-evident. But I think the most visible supply chains will be the most resilient supply chains looking forward.

Jeff Kavanaugh: Once again, everyone, you're listening to the Knowledge Institute where we talk with thought leaders about, in this case, supply chain resilience. We're here with Kerry, responsible for C-suite focus and global partnerships at the Knowledge Institute. What are the main challenges to build a resilient supply chain? You mentioned visibility's important. How do people take steps? What have you done in the past, and what do you see companies needing to do now?

Kerry Taylor: Okay. I'm thinking back again to 2014, thinking about Ebola, and thinking about business since then. Again, it's not rocket science, but it's something you have to stick to. First of all, let's say collaboration. It's self-evident. Partnerships mitigate risk by anticipating supply chain disruption, and managing that risk in the most efficient way possible. Then there's something that's increasingly important to your kid and my kid's generation, Jeff, that perhaps wasn't as important to us when we were their age is sustainability, using today's resources to litigate today's problem and not stealing from the future.

And then there's agility, your capacity to quickly react for a rapid change in supply and demand and that leads to redundancy. Take the Wuhan pharmaceuticals, for example. It's the ability to leverage extra stock and in an emergency to address unprecedented spike and surge in demand. What do you need for redundancy? Well, you need flexibility, of course. Supply chains capability to adjust in the quickest amount of time. And this takes me back to my bet mark, which is visibility, again. How can you truly avoid or adapt to an unexpected change without the ability to see up stream in your supply chain?

So fundamentally, I think when the pandemic is over, and the parks and schools and the NBA soccer stadiums and conference halls start filling up again, supply chain visibility will be very high on the agenda of corporate leadership in terms of supply chain resilience.

Jeff Kavanaugh: It was interesting, seeing clients myself, go from hardcore systems. It would take a year to set up a supplier, for example, to move towards more message-based or lighter versions of this connectivity. So instead of taking six months to set up a new supplier, or a year, you could do it in weeks. You could have simplified contracts. And so I think visibility, what you said, if you can combine that with just the ease of collaboration and spinning up and turning off and redirecting these relationships, it's kind of a leading question, what role can technology play in this to make this flexibility easier than it was before?

Kerry Taylor: As I said, the current supply chain model has been driven by the with technology since the 70s and various methodologies of business. But let's take it fast forward to today. There's been a lot of hype about it, especially with regard to cryptocurrency. But I think blockchain offers supply chain efficiency and transparency by digitizing key documentation and data. In effect with blockchain, the data flow effectively become the digital twin to the material flow through the supply chain.

Now, what do I mean by that? A real life example back from my time in Sierra Leone. I worked on one of the world's largest iron ore deposits. And I was responsible for individual shipments of about 170,000 tons, 200,000 tons in Sierra Leone to clients in China. And to give you some idea of the scale, the Titanic was under 50,000 tons. Every shipment worth between 12 and 20 million bucks was at least four times bigger than the Titanic.

But there were core documents you can't go without that help you determine the value of that transaction, each individual transaction, plus the timing of payment. So let's go back. 2013, I would have to wait for bills of loading and certificates of quality to be issued by the authorities in Sierra Leone where they would be couriered back to London where the finance team would check them for discrepancies. If one letter was wrong, or one dot over an "i" was wrong, they would have to be reissued.

Even if they were right the first time, they would then have to be couriered from London on to our clients in China. Then once they had arrived in China, we'd wait another 21 odd days for payment. So there was a lot of latency in that process. A lot of inertia in that process. But with blockchain, however, it allows you to quickly and securely share that documentation with any party of your choice.

So it's an ideal means and an ideal technology for providing true supply chain traceability. And let’s think even left field, perhaps even a way further downstream of monetizing the value of that data itself. It could conceivably, the data, become another asset class unto itself. It's an asset you can sell further downstream in the supply chain. For example, I think technology for months could truly revolutionize this inertia and these inefficiencies in the supply chain.

Jeff Kavanaugh: You know while we're covering these different attributes of resilience, while tech is cool and thinking about history, I think it all comes back to people, as well. Because you have had your own personal journey before, during, and after this, if you can talk about what, early in your career, that you did or learned that helped you deal with this resiliency and then as a follow up, what are the skills needed for an executive listening to this, or anyone listening to this, for them to become more resilient whenever the moment of truth happens in the future?

Kerry Taylor: That was some years ago in the States and it was one of the wisest things I ever learned. It was at the Panetta Institute some years ago. It was a round table hosted by President Obama's future Director of Central Intelligence and he was speaking to some US retired generals about what went wrong and what went right in the Iraq War. And one comment stayed with me, which I think is applicable to your question. It was said by General Peter Pace, who was former chair, I think, of the joint chiefs. And of course, he was talking about committing himself to military action.

But I think it's applicable to business and to the individual. What he said was, and I have committed it to memory because I'm that much of a nerd. He said, "To succeed, you have to deliver in three things. You need to give very clear guidance. You need to resource it appropriately, and you need to go to win." And I've lived that on a personal basis. And whenever I've worked, I've tried to inculcate those three values with the people I work, and in the work I do. Give clear guidance, resource it appropriately, and always go to win.

Jeff Kavanaugh: That sounds pretty direct and that sounds like it's a good foundation for anyone in times of good or bad, especially times of ambiguity or challenge. You talked before about the triple bottom line, people-planet-profit, sustainability. If we can go to its cousin, or its close relative, stakeholder capitalism, in light of the COVID-19 pandemic, is this too ambitious? Is it too fluffy or pie in the sky, or, what's your perspective on this?

Kerry Taylor: Of course, you were at Davos in January. And the concept of stakeholder capitalism was, I believe, championed by Carl Schwab, the founder of the World Economic Forum, I think, Q3 last year, something like that. Ultimately, since then we've had lots of people pay lip service to it. But I think we might have seen an inflection point in January when BlackRock announced sustainability as a new standard for investing.

And as you know, Jeff, BlackRock is the world's largest asset manager, and seven trillion bucks under management brings you a lot of sway and a lot of influence in the global market. So I think BlackRock might be the inflection point. Let's give you a real life example. Again, I believe recently you interviewed one of the founders of the Circulor, a company offering traceability for cobalt coming out of China. Is that correct?

Jeff Kavanaugh: Veera Johnson, absolutely. At our Abbey Road sessions and- a shameless plug- anyone listening, if you'd like to hear her take on this very fascinating area, it's out there as well. Veera Johnson from Circulor was our guest.

Kerry Taylor: Well, Circulor, one of the number of companies using block chain for supply chain traceability. Don't quote me on it, again, but I think they're working with the likes of Daimler and Volvo. They're London-based. In Berlin, there's a company called Minespider, who I believe are working with Volkswagen. In Canada, there's Hyperledger. And there were numerous further companies trying to crack the nut of supply chain traceability.

What's important here is I think these companies shed light perhaps, I hope on a more robust supply chain framework, that's already in place. It's just that the wider business world doesn't know it's there. The OECD, for example, has its own guidelines for supply chain traceability, which themselves flow international legislation. I know Veera Johnson in that podcast that you were just talking about. She told us that the next year, January of 2021, EU conflict minerals legislation goes live.

Well, what does that mean? It means that EU companies have to ensure they import key materials, the metal, tin, tungsten, tantalum and gold. They have to import them from responsible and conflict free sources. And even more important, they have to demonstrate supply chain traceability to show that it’s an ethical conflict free source. So in effect, they need to demonstrate the entire supply chain. Right up to where that crop was grown, or where that rock or metal was pulled out the ground, you need to demonstrate it.

It isn't even just an EU thing. In the US, there’s section 1502 of the Dodd-Frank Act plus there are the beginnings of due diligence guidelines in China, too. So the point is, this legislation in Europe and America and coming online in China is creating a system of ethical supply chain based around supply chain traceability and visibility. Now, that's factual. That's hard. That's already baked in there.

So if I can think laterally in a bit more left field, there are over a hundred companies right now providing stakeholder and ESG ratings and research. We've all heard of them. Major players like NCSI, Bloomberg. Now, these companies rate culprits on key stakeholder and the ESG metrics, including, in theory, supply chain risk.

Now, as I've already asserted, a visible, traceable supply chain is a more resilient supply chain. So again, let me speculate. Post COVID-19, post coronavirus, what's stopping the ESG ratings agencies assessing corporate supply chain to the same rigor as the OECD guidelines, the Dodd-Frank Act, or the EU legislation? There is a framework already out there waiting to be rolled out across the industry.

So while we can't control natural disasters, or acts of God, we can control how we react to them. That’s the very nature of supply chain resilience. And I know, I can't name them, but I do know that some of the biggest companies in the world right now are looking for the full supply chain traceability solutions to get them up to speed in the post coronavirus era. It's happening right now. They are looking to the next stage.

Jeff Kavanaugh: You know what's interesting for years, working with clients, and being in industry and also with Infosys, people buy two things- hope of gain, fear of loss. In other words, the benefits of something nice or the avoidance of something unpleasant.

Kerry Taylor: Exactly.

Jeff Kavanaugh: And it's interesting how supply chain traceability and supply chain resilience seems to embody the best of both or the essence of both. Because obviously, if you're efficient, and those orders come through when they're supposed to and you can do that thing on your mobile device and get your order delivered to you and commerce can happen, that's efficient. That saves money. People can plan on it. At the same time we live in an uncertain world, which we're just coming into fruition and even more now. And the ability to respond since you can't predict the future with perfection, perfect accuracy, can you respond quickly?

So I think this combination- can you set up to be efficient and have these monetary benefits or other benefits at the same time, be flexible and respond through resiliency? And then now you're adding these frameworks for people, whether it's a quality, whether it's access and inclusion and different aspects, and of course fair labor, fair wage.

You mentioned the minerals but don't forget the labor aspect in all these countries as well, which is very big especially for the clothing industry and others. And then we have the sustainability piece, which being at Infosys and having such an emphasis there, we've seen that and some of the colleagues at the United Nations we work with. It's interesting to bring that up. As we're starting to come to a close, what are the three things a company can do, an executive listening here can do to improve supply chain resilience in their own operations?

Kerry Taylor: I would say, first of all, supply chain visibility. Well, I am repeating myself, but I can't stress it enough, you need to know and you need to go as upstream as possible in your supply chain. You need to audit that. It's not good enough anymore to look left and look right. Who is my immediate supplier? Who is my immediate buyer? You need to go upstream to the source so that there's visibility. Then you need to demonstrate that so it's a full traceability. That's the stage beyond that.

And then you need to be able to act on it when the next coronavirus happens, when the next volcano goes off. And you can avoid obvious mistakes in retrospect. You and I can agree now perhaps it wasn't wise to source 95% of your pharmaceuticals from China. How many people even knew that? How many key business leaders in the supply chain even knew that? So you need to be able to have a visible supply chain all the way back to China, and you need to be able to trace it back to China. Not just it's from China, it was this specific company and this specific location at this specific time, and this was the guy who loaded it onto the truck. That's the level you need to go to. First visibility, then traceability.

Jeff Kavanaugh: And it's interesting in a world awash with data, how much true wisdom and insights are there to distill it. So it's a great parting thought. As we come to a close, can you share who or what has been a major influence on your career or your life?

Kerry Taylor: I'm going to sound like Jimmy Stewart in It’s a Wonderful Life here. I was blessed with a wonderful mom and dad and four wonderful siblings who supported me and loved me in everything I did. So I was given the best start in life. So I guess it gave me a confidence and a curiosity, and a safety net to be able to fail. And so it made me more resilient as a human being, I would hope.

Jeff Kavanaugh: What online resources do you recommend? Any sites, resources?

Kerry Taylor: I'm still new enough at the Knowledge Institute, this sounds corny, but I've been very intimidated by some of the younger analysts here. I still got something of the outsider view, but these people, these analysts, are producing some really neat, smart, visionary stuff. So again, it sounds corny, but I'd recommend the Knowledge Institute social media, LinkedIn, Twitter. And we're having a refresh, I believe, of the website. I really would push people to stay tuned to our website. From a personal basis, there's a website that I check every day. It's called Wall Street on Parade. It's got some great analysis of the financial market. It's blunt. It's very opinionated, very naughty at times, but it's always an interesting read. So I'd recommend the Knowledge Institute site, and a site called wallstreetonparade.com

Jeff Kavanaugh: And how can people find you online?

Kerry Taylor: LinkedIn. They can search for Kel Taylor, K-E-L, Taylor, T-A-Y-L-O-R, short, sweet and simple just like me.

Jeff Kavanaugh: You can find details for everything that Kerry mentioned on our show notes and transcripts at infosys.com/IKI in our podcast section. Kerry, thank you so much for your time and a highly interesting discussion. Everyone, you've been listening to the Knowledge Institute where we talk with experts on business trends, deconstruct main ideas and share their insights. Thanks to our producer, Catherine Burdette, and Dode Bigley, and the entire Knowledge Institute team. Until next time, keep learning and keep sharing.