Welcome everyone to Shielding Your Supply Chain, Using the Right Technology to Mitigate Tariff and Disruption Risks. This webinar aims to provide manufacturing and supply chain professionals with insights into mitigating the impact of tariffs and global supply chain volatility through technology driven risk management strategies. Michael Miller is a seasoned executive with over twenty years of experience in SaaS, supply chain and enterprise technology. As CEO of SourceDay, he drives innovation in direct procurement and supply chain collaboration. Previously as COO, he played a key role in scaling operations and market expansion. He has led leadership roles at Mothership, Project forty four and Convey, which was acquired by Project forty four, focusing on global growth and enterprise partnerships. Michael has also advised emerging companies as an operating advisor at Elsewhere Partners. His career includes leadership at Dell, Vitricity and Nugistics, Passionate about scaling businesses, he excels at simplifying complexity, driving execution and delivering measurable impact. And a bit about Robert. Robert Kramer is Vice President and Principal Analyst at MoRE Insights covering enterprise data and ERP, including data management, databases, data lakes, data observability, data analytics and data protection. Robert has over thirty years of proven experience with startups, IT companies, global marketing, detailed strategies, business modeling and planning and working with enterprise companies, GTM assets, management and execution. Robert holds decades of relevant experience having been a global marketing and enterprise data reporting executive for multiple solutions across several industries. His areas of expertise include ERP, SaaS, CRM, decarbonization, cloud, data protection, cybersecurity, enterprise data, extensive data analytics analysis, and smart platforms. His experience spans manufacturing, finance, healthcare, transportation, academics, And with that, let’s jump right to Michael and Robert. Michael? Good morning, everyone. Robert, good to see you again. How are you today? Pleasure. Doing very well. How about yourself? Doing great. Doing great. Looking forward to the conversation today. Everyone just wanted to give you a a sense of what we’re going to be talking about today. For those of us, in and around supply chains of late, the hits just keep on coming. Any any hopes that the pandemic was a singular event were dashed over the last years by just a never ending steady stream of disruptions, whether it’s war in Ukraine, blockages of Suez Canal, factory fires, and labor shortages. And now we sit here with tariffs and trade wars looming. If you look at the the headlines this morning, it’s full of words like chaos and uncertainty, volatility. And so, you know, the the hits just keep on coming. In fact, you know, what we’re gonna talk about today is if there’s one thing we can be certain of, it’s that there’s always going to be a disruption next. So we’re going to talk about what we’re seeing in the market, what we’re seeing in the data. We’re going to talk about sort of the role of tariffs. We’re going to talk about the role that processes, that technology can play in mitigation. And I would encourage you all as we go through the content today, certainly there’s a lot of content directly pointed at, you know, how to think about and mitigate, the looming threat of tariffs. But a lot of what we’re going to discuss are really sort of evergreen tactics and strategies that will build resilience in your supply chain for whatever the next disruption may be. So looking forward to it. We we do have one question just to get all of our brains going and thinking about sort of, the state of disruption and the state of volatility in our supply chains. So I would ask you all to think about what adjustments have you made to your supply chain strategy and tactics over the last three or four years to account for supply volatility? Essentially, what learnings and practices did you put into place after the shock of the pandemic? And we’ll we’ll cover these at the end of the call. So I I will pause there and give you a few seconds to input your thoughts, and then we’ll jump into the content. Great. Well, Michael, it’s always a pleasure to chat and to talk about these interesting subjects and what companies, manufacturers, and distributors need to do. You know, you know, how do we actually get here and what past events and what’s going on with the tariffs? But do these disruptions, are they new to, you know, the supply chain that they’ve always existed? I know that there’s there’s a lot out there that have recently happened since, you know, we have the pandemic COVID kind of showed us that there is supply chain disruptions, and we need to be ready for this and build resiliency. You know, you have the Suez Canal blockage, which caused a lot of problems. You have the semiconductor, which really hit the automotive industry and, you know, a few other industries, and you have these political situations that have existed that caused, a lot of issues as well. There’s always something that seems to have been going on. But just a quick question to you before we get into the current state. Is this new, or is this the predominance of the last five or seven years showed us that we better get on our toes, or is it more that the technology is more pronounced now that we can be more resilient or all the above? Yeah. I it’s it’s interesting just the the the fifth the quick fifteen seconds on Source Day before we get into what the data are telling us. Source Day sits between manufacturers and distributors and roughly a hundred and fifteen thousand suppliers on the network. And so we’ve got a really unique sort of perspective on the communication, the changes. We see about one hundred million PO changes per year across about seventy billion of spend. So here’s the story that the data tells us, and it’s sort of agnostic of what the individual events are. So you go back to twenty one, twenty two, we saw significant volatility, you know, measured by change, and a lot of that was buying company proposed changes, and it was mostly on dates, and it was mostly push outs because there was uncertainty on demand. For the last couple of years, that really shifted to cost related changes as suppliers and manufacturers were trying to figure out how to absorb, inflation. In fact, we saw twenty percent of orders had what we flagged as a cost risk, meaning that cost was more than ten percent higher than it was the previous year. And then back half of twenty four and into twenty five, it’s really started to swing back towards what we flag as sort of demand uncertainty. So changes around dates, push outs, etcetera. So the data tell a really clear story over time that you can match to headlines along the way. The two things that we are flagging is, you know, with tariffs, with trade wars, we would expect to see, you know, the the cost risks start to emerge again. And if this holds, a lot of buyer proposed changes and push outs is typically followed by a lot of supplier volatility and an erosion of or pressure on on time delivery. So this sort of ripple effect that you see is gonna be really prevalent probably twenty five and into twenty six. Yeah. It’s a really interesting point because of the supplier network is a huge key to to the disruptions on top of the actual issues and the volatility globally. But I’m seeing supply chain disruptions. I have an estimated of a hundred and eighty four billion annually of disruptions that are costing the supply chain. I’m also seeing the IoT shipment adoption as being one of those things within the supply chain that is up drastically to help from a tracking standpoint to help modernize. So I think there’s a lot of things that are moving pieces that we’re actually gonna cover from this point on, but the current state is is very complex. It’s very multifaceted, and there’s a lot of issues that we’re gonna cover. And from the what you said at the beginning, the resiliency is a huge key, adopting technology, modernizing. But it doesn’t all have to be done at once, and we’ve talked about that a little bit before. We’ll kinda conclude with that, that there’s ways to go about this. So I think a key takeaway is invest in technology to improve your supply chain, but at the same time, to build that resiliency. And I think it’s you know, we can kinda start talking a little bit about tariffs. We can go to the next slide. And I think we have a polling question, and we have a lot of information on tariffs. But how are and this is something that if you can answer, how much are supply chain disruptions like tariffs or item shortages impacting your business plan? So, you know, we have a one, two, three, four, and, if you can answer that. Now we have a, b, c, d, what you think it would be. So will everybody answer that? See if people are feeling optimistic or pessimistic right now. I mean, I also think that the disruptions are a kind of a state of business. I mean, it’s just one of those things that you have to be you have to know it’s just gonna happen. You know? Whatever business you’re in, you just there’s gonna be some bumps, and you have to be able to handle those. And I do feel the more investment in technology allows you to handle those bumps because you have ability to forecast, plan, have analytics and and data on your vendors to make changes, to know when the disruptions are happening. I know I’m kinda getting ahead of the game, but I think that to prepare yourself, like you said at the beginning of this, is really the most important part. But as we jump into tariffs, if we can go to that slide oh, I actually thought the twenty five to fifty was the number as well. What do you think, Michael? I I I was, I’m a little bit surprised, as well. That that’s good. So people are feeling, cautiously optimistic or at least not catastrophic. So exactly. So the tariff effects are are really, I guess, very complicated because it it address it it really hits a lot of different areas. I mean, we when we think of tariffs, we think of cost. We think of, you know, just enormous, business impact to organizations. We think there’s a a huge risk that it hits certain industries, and we’ll talk about those industries there in a second. How do you change? I mean, from just before I go a little further, Michael, is there any good in a tariff on anybody on on any country from your perspective, from a supply chain perspective? I’m I’m I’m not a PhD in, economics. You know, the I think the the the greater goal of, you know, protecting manufacturers and, you know, eventually repatriating some manufacturing to the United States, I think these are great goals. I think what it translates into near term is uncertainty, and businesses hate uncertainty, markets hate uncertainty. And so, you know, some things and we’re gonna talk a lot today. I mean, there’s technology stories, there’s modernization efforts. What I also wanna make sure that, you know, there are things you can do today. There are things that you could do today to get smarter, to get more ready, to start building resilience. And, you know, some of the things that we’re talking to our manufacturing customers about is it’s time to do a deep scrub of your suppliers and your supplier network, Right? Where are they? Where are you single sourced? What does their performance data tell you? You know, who where do you have, reliable and predictable suppliers? Where do you have risk? Who do you think you can lean on, you know, as the uncertainty plays out? You should be looking at your BOM. You should be scrubbing your item master. What do you know about your lead times, and where do you have confidence in your lead times? What items historically have more cost volatility? Understanding sort of state of the state within your existing both kind of item master and supplier network is is kind of a no regrets foundational sort of data set that will help you get ready for whatever is next. Maybe that cleans up your build material a little bit like you mentioned and it gives you maybe a quality product at the end and cleans up your suppliers. But some of these industries are really hit Let me just one additional thing. What happens a lot is, you know, I I get sort of my my RFP and I get my feedback from my supplier and I load it into my item master. It could be, you know, a really long time before I go back and revisit that and update that with, you know, real lead times, cost dynamics, performance dynamics, etcetera. So there’s there’s frequently a lot of stale data, sitting in that ERP on which you’re trying to make decisions. I totally agree. And would that ERP that you mentioned is a big backbone of these manufacturers and distributors. But when we talk about the different industries that get hit hardest from the tariffs, we I think about, like, the automotive business and the tariffs that are going on there. I think about the electronics business and the textile business, and, you know, with the steel and the aluminum that’s that’s happening, with all the the tariffs that are going on. And and what happens is just taking an example, even the construction business with the building materials going up, and the same house that costs x y z or building or whatnot is is higher by x percent. But is the consumer who’s buying that able to to to purchase that the way that they’re used to, and is the house actually worth it based upon what those tariffs involve? So I think that and then you have the aerospace industry, the appliance, toy. I mean, this goes all the way down these tariffs. There there there are a couple of things that that that the themes, right, you know, durables, whether it’s appliances or automotive that are heavily reliant on raw materials like steel, you know, certainly at the top of the list. Ones that have geographic concentration, and I’m thinking specifically of reliance on China, you know, a toy or a fashion or things like that, these are the ones that are sort of at the top of the list in terms of, you know, risk of impact. Yeah. And by the way I agree. You know, talk about whether consumers can can, you know, absorb. You know, as I as I mentioned, the the biggest dynamic that we’re starting to see in terms of manufacturing response is push outs. Right? I mean, they’re they’re saying, you know, I I I’m not going to take, you know, this this inbound, this supply, these raw materials. And that to me is a direct reflection of uncertainty about that question, about uncertainty regarding demand on the other end, giving price increases. Yeah. It’s a huge huge problem with these tariffs, but at the same time, I think a lot of these companies can invest in technology, and there’s a bunch of technology I wanted to bring up to actually, you know, off set some of these, you know, preparations for the disruptions of tariffs. You know? Let’s talk a little bit about, AI. You know, we’ve all been talking about this for the last year or so and, you know, predictive analytics and using AI within your system to forecast the potential tariff impacts and optimizing your pricing strategies. You know? So this is a way to modernize in a way with using your data, as you mentioned, to segue away from, you know, being held, you know, hostage by these disruptions and getting ahead of the game. Having supply chain visibility, with your platform, which is what you, you know, do and could talk about a little bit more, tracking your goods, identifying the correct routes, and minimizing these tariff costs based upon that. Blockchain is another one for the understanding where the origin of the product is. Yep. You talked a little bit about ERP, and I could talk about that forever. But, you know, it goes back to the data and having that data being, like you mentioned before, correct so you trust it and can utilize it the right way. But I’ll pause there before you keep on going because I do have a few more to talk about. What you go ahead. Yeah. No. I I I think, you know, there there’s there’s some stuff on here, about adapting, and it’s it’s things like, you know, near shoring, off shoring, reshoring, and, you know, these are not necessarily kind of short lead topics. They’re incredibly complicated topics. Right? And, you know, it’s going to be highly industry specific. You know, one of the things that we’re seeing a lot of and by the way, this is acceleration of a trend that’s been in play for a while, which is kind of hedging bets on China as, you know, the world’s manufacturing facility, so to speak. And, you know, there’s a reason why it has been. You know, the the infrastructure, the skilled labor, you know, the cost points, etcetera, the the port infrastructure. I mean, these these things are hard to kind of stand up and replicate overnight. So, you know, it’s not gonna be an apples to apples, but we are seeing, you know, and starting to see countries like Vietnam, like Indonesia, like India, starting to be beneficiaries of this shift. There are certain industries where Mexico will, you know, certainly make a lot of sense depending on the nuances of the tariffs, but this is this is a a sort of complicated and, you know, medium to long term strategy that people need to think about. Well, do you think it’s a combination of technology and nearshoring? And I I mean, the answer is yes. Because I feel that that, you know, that what we’re trying to do with these tariffs is beef up production in the United States, you know, and utilize what we can. And but one of the things I think is super important, I’ve always thought that ERP is your main backbone of your business, and that data is super important. And connecting the supply chain management, you know, software is the way to actually hedge, you know, your your system your your your disruptions that you have. I wouldn’t say hedge your bet, but hedge the issues you potentially have. So if your ERP is solid and modernized and you have a supply chain, system, your supplier network is such a big deal because you have we have that on adapting. Because I remember during COVID when when you had to change your suppliers, you had to change your manufacturers based upon the circumstances, and that was a big deal. So in a sense, it shook out, you know, the like you were mentioning, it’s a way to put things in a perspective where everything is gonna be better, you know, but at the same time, you have to go through that. Anyway, what’s what do you think let’s go to the tech. So where we’re at with tech, should I continue to you let’s go to what you have here on the screen. What is your confidence level in current technology to help mitigate impact of your business? Because we do have a lot to talk about with technology. We do. Very little is okay. Pretty confident. I’m all set. Because I started talking about it a little bit, but I think it’s it’s something that we really wanna grow into a little bit more. Yeah. Yeah. Yeah. Because, you know, this is a great question because of the sense that how many companies are on legacy systems and feeling like they’re vulnerable? How many companies are pretty confident, I’m all set, I’ll modernize them in the cloud, I can take advantage of the technology that I previously spoke about, that you’re gonna talk about right here, because I think that’s really kinda where the rubber meets the road. Agree. Where companies sit going forward. Agree. And I I think, you know, before you go shopping for a new house, it’s probably easier and more expedient and cheaper to kind of assess the old house and its ability to meet the job. Yep. Yep. Yep. Yeah. Mean and and hopefully, Robert, this is this is one of the beneficiaries of, you know, going through a series of shocks. This is not necessarily a new topic. Right? And I I do believe that people have been making investments in systems and processes and people and network along the way. So, you know, sort of shutter to think what that poll would have been, you know, pre pandemic, but hopefully, that’s a reflection of, you know, investments and efforts have been made along the way. Absolutely. Let’s shift to tech, and I I wanna pick up on something that you said. There’s there’s really kind of a maturity curve here, and it it starts with, do I have good data? And just to sort of share an anecdote or two about, you know, something that’s close to home, a lot of this interaction and discussion with, you know, your supplier network, which, you know, it sits in the minds of your senior buyer who’s been there for thirty years in terms of standard operating procedures. It sits in their email inbox. It sits in spreadsheets, etcetera, etcetera. And, you know, to varying degrees makes it back into your ERP, which should be your system of record. But without that data making it back consistently and efficiently into your ERP, you’re running MRP cycles potentially, you know, off of older, incomplete, or outdated data. You are trying to automate, you know, AP processes, and you’re not gonna get three way matches because it’s not gonna match, you know, the receipt or the invoice from the supplier. So, you know, you are in many cases trying to run automation without doing the foundational work on data quality and data completeness. It’s tricky. Yeah. I’m a huge believer in modernizing the data, but a lot of companies, I believe, aren’t necessarily prepared for that gigantic move of Agree. Transformation and modernization. But as we talk about the things that are on the screen, and to to get to this point, you have to be modernized in a sense or be capable of being partially modernized, and I guess you could potentially be manual to exercise some of these technology angles. But that’s a tough thing. You know, coming from a past world of legacy systems, I think you’re gonna be challenged by being able to use modern technology, in today’s world of how quick things are moving. It’s I I think with companies, you know, one of the things that my father used to always say is this these ERP systems, because I used to work for an ERP company, these ERP companies are assets. This is not a bonafide accounting system. So the data in there is meant to streamline your business to bring the data to the level where you can make choices and make decisions where it benefits your company, it’s a competitive advantage. Well, let let’s let’s talk about some ways, like, that AI can play a role today, and I wanna be really careful talking about AI. There’s a lot of noise, there’s a lot of stuff in the market, so specific to this challenge, one thing that AI and ML are really, really good at is taking lots of data, pattern matching, right? And so, you know, one of the things that we think about is early risk detection, sort of raising raising an issue very early that something is is not on the green path, it’s on the red path, right? Maybe I couldn’t have seen that. Maybe now I have two to four weeks where I can resolve it, you know, with a supplier or or internally. So early detection of risk where something’s on the red path is an amazing and very, like, tangible application of AI in this case. Because you’re taking historical data and external factors, and then you’re you know, it could be weather. It could be trends. It could be, you know, economic issues. It could be, you know, political situations. But you’re taking that and it’s you’re asking AI to predict that risk management Yes. Which is key to the supply chain and making your intelligent decisions. Well, you can also use it to not only kinda detect it, but recommend an action and increasingly have it sort of take that action for you. You know, the next sort of obvious topic is automation. And, you know, in our space, there’s an enormous amount of back and forth by humans, which is not particularly valuable. One of our our larger enterprise customers thinks that they can automate and eliminate up to eighty percent of human touches. It’s things like small cost changes, small date changes, proposals by approved vendors, etcetera, that you just don’t need to touch. Right? Right. You know, the the two schools of thought are either I’m gonna take advantage of that reduction in workload to kind of meet aggressive opex targets around, you know, cost uncertainty, or I’m gonna challenge my teams to be more strategic. Right. You know, just when you press, well, to say, more difficult to do. What does it mean to be more strategic? And, again, like in our world, it’s it’s not I’m gonna be responding to a single PO that’s late. I’m gonna sort of take more of a systemic approach. I’m gonna look at my supplier network. I’m gonna look at my item master. So when I fix a lead time on an item or I adjust supplier performance, I’m not dealing with a single purchase order or shipment. I’m potentially addressing and resolving tens, hundreds, thousands of purchase orders. So those are the kinds of thing. If you can automate the day to day, the the low risk kind of, you know, repetitive stuff, it frees up an awful lot of time to go think about these big challenges, to think about resiliency improvements. Yeah. I mean, the supplier performance monitor is a huge part of this, going forward with the supply chain and what AI and automation could do. You can kind of get into scoring with the suppliers. You can get into compliance checking. You can get into what I like to talk about is who is the sustainability and compliance monitoring as well, which is underneath this component of the supplier performance monitoring. But, also, the strategic component is a really good discussion because I’m a firm believer in industry five dot o, which you don’t eliminate the humans with the robots. Correct. The humans take they collaborate to make things better with the robots, which is AI and the Adjunctic AI. And the tasks are doing the mundane tasks from the with AI, and you’re able to use those people, those resources to make more intelligent decisions and, like you said, task them or challenge them to understand the system and what the vision of the company is. And the sustainability element and compliance element and more collaboration, I think, is part of this enhanced automation. It’s at the next level. I don’t think we know exactly how far it’s gonna go, but this is the direction. Let me ask you. You mentioned AgenTik AI, which is another know, kind of hot hot topic in in the press and in these circles. You know, in in in our world, you know, good luck building an agent effect effectively that sits on top of disparate emails and spreadsheets and, you know, the know how of your thirty, you know, years in buyer, etcetera, etcetera. Like, how do you feel that some of these core systems, you know, ERPs, etcetera, are ready for what’s next and ready to sort of be the systems of record in this highly volatile, you know, time. I think the script was built for it to be ready. Right? The script of the ERP with, AgenTeq AI and then the bolt on systems, we need the ERP to be modernized, to be able to be ready for what all these companies are bringing new technology to the forefront. If you kinda go back what is needed to get your ERP ready for what we’re talking about today, it goes back processes, change management, data management strategy. So I would invite all, you know, those companies that are looking at something like, really enhanced supply chain network and supply chain modern software to have their ERP ready, but it has to be modernized to where it’s trusted and the data is I’m not sure, you know, from my perspective that most companies have not taken that leap because the transformation’s a little daunting, At the same time, it’s a huge key. Oh my gosh. And there are ways to get started today. It is daunting. Let let me connect a a couple of things that you said. There’s sort of this idea of system of record. There’s also this idea of kind of a geographic optimization of my network, right, to to to be more resilient. Was talking to a a customer, and they are considering, you know, let’s call it a a shift away from China specifically to kind of other other countries in in Asia. And what what they’ve told us is that is significantly easier to do when you have not only kind of transactions and data, on platform on a platform already, but think of this, you have standard operating procedures already instantiated through automation. So the ability to lift and shift and minimize the change management of bringing up and training and learning curve and getting new data, etcetera, it’s it’s one of those things that you don’t think about, obviously, but can be a hedge for some of these, you know, potential strategies that you’re gonna have to play out in the next couple of years. Yeah. Absolutely. And and so when you talk about a plan to build a supply chain resilience, I I think that’s really the, you know, what we’re really talking about. Like, how do you prepare your company for that? And, I think there’s a lot to be done, and it does really kinda go back to the ERP and billing, Zach, what you talked about. But, you know, what do you think about doing a supplier risk assessment? Because I think Amazing. These is Yeah. I Go ahead. Well, no. I I not only do I love it, but I think that’s one of those things. You know, the prospect of geographic optimization and, you know, modernizing ERP, you know, some of these things are important, but to use your word, daunting. A a supplier risk assessment, you could leave this webinar when it’s over and go start doing that today. I think where you are single source versus not, where you are getting critical parts, you know, where your what region, you know, your suppliers are shipping from. Getting sort of your arms around the fact base of, you know, your suppliers and identifying like where you can lean on in hard times and where you’ve got risk and what you want to do about it. That is again, like, it’s it’s sort of the the topic of tariffs that have us talking today, but you should be doing that on a regular basis regardless. Yeah. I mean, it goes back to even we talk about inventory control. We’re talking about procurement tracking. But if you go back to inventory control, just to kinda just step in that direction just for a second, the legacy ERPs are, you know, someone set mins and maxes for their inventory control, at some time. Then we want to adjust in time. But the benefit of AI and everything that we talked about with technology, inventory control will go based upon supply and demand, cross selling, with a, you know, with an added value that you might think you wanna have in your inventory, and then you’ll be able to ship all this info all these, goods and services based upon your supply chain software, understanding the disruptions and the volatility. I mean, to me, to have that modern software is a is a competitive advantage for me because of the fact that if I didn’t have it, I’d be doing everything more manual and having cost elements to overcome, which would be which could be catastrophic. I agree. If we we talk about the first, you know, immediate is to do this these assessments is to, you know, real time, you know, procurement tracking to utilize automation. And and really, like you’ve talked about for the last half an hour, so the supplier performance is a is a big deal. Because in the end, I think you’ll see that some of your suppliers cost you more than they should to use them. Do you think about it? There’s an interesting total cost of ownership, scenario. My my fear is that and and by the way, I I should point out that, you know, of the responses to tariffs that we’ve seen, I talked a lot about move outs, you know, from from buyers around demand uncertainty. There we did see a cohort. There was a spike in move ins. Right? Like, basically, wanna lock in some price certainty. I’m gonna take my buffer stock up, which is both a reasonable strategy and contains risks because you’re tying up cash and working capital. But the the thing to me is, you know, the the the embracing of the suppliers. I think the extent to which you can drive more collaboration and engage them more, forecast sharing, joint planning, etcetera, I think, you know, a knee jerk response of only sort of thinking about price in this immediate, unshortened time could have, you know, ramifications down the road around customer experience, quality, etcetera. So there’s certainly risk, in this near term time frame as you potentially start to, go price shopping with new suppliers, that I I would I I think you’re saying, like, make sure you’re also applying a a total cost of ownership lens to this. Yeah. Well, I think it’s also important to have second, third, fourth vendors or suppliers to your standard ones because of the fact that it gives you more flexibility. But the pricing thing, you can’t always buy on price. We talked about this the other day because there could be hidden costs or this total value, like you said, of, that supplier or ownership as as you said as well, but I think that’s a big key. So as we talk about the long term, we talk about, you know, really connecting the different types of, areas of the business, and I think that’s a big deal. And also transitioning to the cloud to take advantage of AI. I think Those are huge components, and we talked a little bit about data. And there’s a little bit more that I wanted to add a couple more things. But before I do, what what are your thoughts about the long term road map? Yeah. I think it’s awesome to sort of start with the end in mind. And, you know, there is a very clear maturity curve here. And, you know, I sort of joke about, you know, good luck building AgenTeq AI on tops of kind of junky, data and systems. But the things that you do today, right, start on that path. You need to, in our world, you need to get the suppliers on network, and then you need to get that data humming and clean, and then you need to get into the ERP. And that’s when you can really start building some of these automated workflows, some of these AI driven insights, etcetera. It’s a it’s certainly a multistep process. And and frankly, you know, it starts today, if not if not, you know, over the last months and years. I think the real time information is what’s most important. So depending on how the business is set up so the data is really important, but I don’t think I would say that IoT devices are should be a little more significant than they are now because they’re grabbing that data from outside of the core business areas, or or they still could be core business areas. But I love IoT. Right? I love IoT. There there’s sort of no better in transit visibility and tracking solution as long as your unit cost can support it. And there are many, many sort of industries where I can’t afford to put, you know, an IoT device on every single crate carton or truck or boat. You know? Well, I think it’s the swing should almost be you cannot afford not to do it because if I can get that data, it depends on how much and how much it costs because we go with that price. But if I can have access to that data in areas that I never have had before, it makes me a more leaner and more intelligent company, then there’s an investment that does make sense. But I think to your point, you can’t put it everywhere, but you could start with different layers. Maybe you go like you said, you start with the you know, you’ll work your way backwards. Where do you wanna be in five years? Work your way backwards. Start implementing technology. Do your immediate, mid, and long term plan, and then look at the different technology that you’re gonna need in those areas because you can’t skin it all at the same time. It has to be staged. And I think you look at the most important. And I think if I looked at the most important, it’s gonna come back to modernizing and getting your data ready so you could be able to exercise modern areas of technology to utilize. What what is, what a source they need from from the ERP to be modernized for success? Yeah, I think that’s a good question. We kind of we do deep bidirectional, you know, integrations with the ERP around the purchase order lifecycle, vendor data, item data, etcetera. So, you know, we play a role in cleaning that data up. Certainly migration to the cloud, certainly kind of API based, you know, layers and ability to expose more easily to the the outside world, you know, the ERP capabilities, you know, that that certainly helps. I I I wanna add on to something that you said just which is a word of caution. There is a huge role, as we’ve discussed, for technology to play. Get your data right. Build your network. Think about AI. Think about automation. This is all incredibly valid. The thing that we talk about a lot with our customers is if you view this problem as only a technology solve, you will fail. Yeah. So we talked to and and by the way, store stake gets compared to, like, ERP vendor portals a lot. You know, that’s the space in in which we we operate. ERP vendor portals fail nearly a hundred percent of the time, and it’s because it’s a technology solution for a programmatic problem. This is, as you said, it’s people, it’s process, it’s tools, it’s change management, etcetera. So I would just encourage as all of these incredibly powerful new tools come, you know, come to market, are there for our our, you know, usage, don’t view it as just a technology problem because you will not be successful if you’re not thinking about the people component, the change management component, the measurement, the accountability around it, what outcomes are you looking to deliver. It’s just it’s it’s a it’s a broader story, and I don’t point that out to sort of increase the daunting nature, but but it’s such an important call out. Well, one of the things is you have to be ready for change. If you’re not, your competitors will, and you can’t afford not to modernize because of the fact that technology is moving so quick. But I know we have some questions, and, hopefully, Michael and I can can get some good answers. No, absolutely. So let’s go ahead and get to I will tell you, I’ll begin by commenting that there was a lot of interest in this. So we actually had some questions submitted in advance as well. So we’ll get through them as quickly as we can. And if we don’t get to your question, then we’ll make sure that either Michael or Robert follow-up and get your question answered. The first one there’s kind of two questions that were asked by the same question basically asked by two different people, which is in terms of near shoring, what are same geographic regions we should focus on or is reshoring a better strategy? The similar question is please expand on how near shoring would help if Canada and Mexico are hit with tariffs? I’ll let you handle that one, Michael, since you talked about it a little bit earlier. Yeah. I think it is unclear sitting here today exactly how the tariff programs are going to be implemented. I think we know all of that. I think we should assume and it is safe to assume that there will be an incentive structure around reshoring. So understanding sort of how those incentives and programs roll out will be important. I mean, clearly, it is going to be a governmental and financial incentive to, you know, bring stuff back to the US. So understanding how that might impact you, affect you and benefit you, I think is going to be really important. The geographic optimization, whether it’s really near off is a really sort of bespoke to your business, to your industry, and to the, you know, thousand page kind of tariff implementation playbook. It’s going to be really specific. It’s really difficult to answer that in a one size fits all. I think it’s gonna depend on your business, I’m I’m sorry to say, and I think there’s a lot more data coming. What I think the message today is, you know, having data, having a supplier network, having sort of modern systems so that if you do, according to all of those sort of rules, regulations, tariffs, etcetera, need to shift from one geo to the next, from one country to the next, that that is something that you are able to do in a more agile, cost efficient way. That’s sort of an evergreen investment because we simply do not know exactly how this is going to be operationalized. Alright, cool. Next question, a little bit related as well Michael, And I think probably either one of you could speak to this. What’s a good rule for supplier diversification? Should we focus primarily on geography? No. I think at this point, and you know, I think the reality is you need sort of systems to help you lean into the complexity. Because if I have a supplier network that has that is truly resilient, then I am not single sourced, and that is both supplier level, part level, and geography level. You have a more complex network that could absorb shocks from different directions. You know, I I was with a customer the other day, and we were sort of looking at his his dashboard in in Source Day, and he was running a supplier kinda cohort comparison across a specific product category and was seeing incredibly poor lead time performance from a supplier in one country and significantly better supplier performance from a a supplier in another country. And he made the decision on the call to shift business from one to the other. And I think, you know, sort of the the leaning into that complexity from a geo, from a part, from a cost, from a a supplier network is gonna be necessary if you want to be truly resilient and responsive to these changes. Also think I’d go in compliance, You know, can it be compliance to what you know, what’s pricing look like? What’s sustainability look like? What are your needs? So I don’t think you have to be, set from a geographic standpoint, but you have to be able to be, like, lean and flexible and resilient to what you’re actually doing. So I think it I actually do think it matters a little bit based upon what I just mentioned with the compliance and sustainability because one region might understand the compliance issues more than another region’s, supplier. That maybe, maybe not. Yeah. Yeah. I mean, sophistication of supplier, responsiveness of supplier, reliability of supplier, like these are things that are more difficult to sort of get at in an RFQ necessarily, but, you know, it’s something like like we put that on scorecards. Right? So you can really kinda track it over time and make more informed decisions about about that supplier network. That’s that’s a huge key because I think that scoring shows you what the capabilities are of that specific supplier. So you have multiples that you can shift gears if necessary, but that scoring is is huge. Do you think that that’s been used a lot prior to, the last five years, the scoring? Five years, the scoring? We hear a lot. I’ve wanting I’ve been you know, it’s been on my list to build, you know, supplier scorecards, supplier scoring. I I don’t know that it’s always something that kind of makes the prioritization cut. It’s difficult to do without some of the systems that we’ve discussed. It can be really stinking powerful, you know, when you get it in to make kind of real time decisions on how you balance risk, how you shift supply, from one region supplier part, etcetera, to another. So I think it is growing in importance and it does play a real role. Yeah. All right. Next question. How do you feel this US initiated global trade war will impact the availability of supply in the North American market in the long term? Well, think it’s gonna be a definite problem short intermediate you know, short, middle, and long term because it’s going to be a ripple down, throughout. It’s going to change how things are produced, and it’s going to increase, you know, the pricing, and it’s going to cause economic issues as well from a group perspective. Agree. I do think long term, you know, what we’ve seen over and over is, you know, these global supply chains and networks and businesses are adaptive organisms, right? And whether it’s, you know, new geos, whether it’s cost offsets, you know, through additional automation, whether it’s re architecting your sort of bill of materials to sort of, you know, adapt to these new conditions, whether it is on shoring more, you know, we’ve seen over and over that these are adaptive organisms over time. So, know, I’ll go with the optimistic crowd from the early poll results and say, you know, over time we’ve shown that we can adapt broadly. All right. Kind of dovetailing onto that a little bit, what other industries are impacted by the tariffs? Well, like we said, we don’t know exactly how the tariffs are going to implement. I think some, we’ll call it known knowns are, we mentioned durables, whether that’s automotive or, you know, large appliances, for example, that are reliant on steel, that seems to be in the crosshairs. Businesses that are overly reliant on China and China only. So we talked about kind of fashion, we talked about toys, you know, some of those are certainly at risk, you know, where you are overly reliant on, you know, steel and manufacturing or China for manufacturing. Those are the ones that at least again, we we don’t know exactly how it’s gonna roll out, but those seem to be fairly high confidence, impact industries. Ragh, what would you add? I mean, you you said said it very well. I guess you can add, like, the aerospace industry Sure. The construction industry. But I would would almost think, like, even the chemical industry. Anything with, you know, manufacturing is usually done not a hundred percent in the United States. So whatever companies that are gonna be, like, reliant on China, I think that that’s gonna be a real problem. And, I think some of the ones that hit my hot button are the automotive significantly in the construction industry. Those are two big ones right off the bat. At least in our data at the other end of the spectrum so far, you know, medical devices, cosmetics, health and beauty, some of those we are seeing kind of less impacted. But then as specific tariff programs roll out, that could change. But right now, we’re seeing less impact than some of the defense, automotive, appliance, home building, etcetera. Great. Agreed. Next question, and I think this is kind of a follow on to what the two of you talked about a little bit earlier, which is how long does it take to get an ERP ready for AI? And another question from a separate person was what’s involved in getting ready for automated procurement? And a third question, and I’ll read all these again, is how are you source day de risking automating the procurement process? So the first one is getting the ERP ready. The second one is how do you get ready for automated procurement? And the third one is how do you de risk the automation so you don’t get yourself into a different mess? Maybe I can take the first one. How do you get your ERP ready for AI? I think that’s the question. And that’s not really something that we can answer because it goes back to what Michael and I both said, the people, the processes, change management, the data. Depends what your current state of your ERP is. Right? And I think that’s the huge, variable is your do you have a modern system? Do you have a legacy system that has to transform? And AI feeds off of data. So if your data management strategies are not stable, I would think it would take a little bit longer. So those were those would be the, you know, the the unknowns and the knowns that you would have to go with, but it could take, quite a bit of time, or it could be a a pretty easy shift if you’re already modernized. Yep. I mean, in terms of de risking automation, this is such a great, important, and timely question. So talk to a bunch of CIOs who are are thinking about this, and and sort of the consensus approach that we’re taking is a little bit more of a trust but verify approach. We are certainly leading with a human assisted approach. So specifically, we are kind of we are limiting who can kind of build and deploy automations. That’s typically an admin role. We are providing a capability to run what if scenarios, so you can understand what the impact is going to be of that automation. We are monitoring the automated workflows and sort of tagging and escalating as another risk type when something has sort of outside of the norm, and then we’re providing all of the kind of audit logs and tracking, etcetera. It’s it’s a really important question. You are turning over what historically has been a one hundred percent kind of manual owned process to to the machines. And, you know, it may be a low risk, task that you are automating, but it’s incredibly important to build confidence and transparency around, you know, the workload that you are performing on a human’s behalf. Great question. Yeah. But you’re able to shift from manual and then questioning yourself if you made the right decision to trusting your data and getting the automated, you know, conclusions and to shift from manual and time and time consuming to efficient and successful. I mean, it’s a it’s a big deal to, to transition to this modern type of solution. And at the same time, it turns into being a gigantic competitive advantage. It’s an asset that companies will need for the long term at some point. We’ve got time for one more question. And then if we didn’t get your questions, obviously we’ll make sure that either Michael or Robert follows up and get your questions answered. The last question is actually I think it’s probably the elephant in the room. What’s the typical technology cost for all of this? And perhaps you gentlemen can break it up and maybe if we can go back to the prior slide and kind of what’s kind of the get started cost, kind of what’s the midterm cost and what’s kind of the end game cost? So it’s more bite sized chunks rather than a huge big price tag. It’s like Robert, how long is a road? It depends. No, I think depending on it could be tens of thousands dollars, hundreds of thousand dollars. If you’re a giant global enterprise deploying a new ERP, it could be millions of dollars. But you know, it depends on where you are in your organizational maturity. There are ways to get started for not much. There are ways to get started today. There are ways to get started where you are augmenting and improving existing investments that you’ve already made. Again, this is not a recommendation to go out and buy a new house necessarily, but, you know, being smart about how you might sort of upgrade and uplift your your existing one is is, you know, a pretty rich conversation. Well and I just to piggyback that, I don’t think price should be the number one concern here. I think modernization is the is the concern. How do you do that? At what speed can you do that? Because you will get passed up by your competitors. So you you should bite off what you can chew, but at the same time, you can’t afford not to invest in technology that could solve issues that you’re gonna have now or in the future. So I think it’s a big deal. Price is always gonna be a component, but it should not be, the main. It should be quality over, price, the quality of what you’re getting. I mean, that that almost I don’t know if we’re we’re at sort of closing comments, but but what what you just said is is essentially my closing comment, which is we’re here today because kind of, you know, trade wars and tariffs has brought us to the table, but the discussion we’re having about better data, better process, more resilience, smarter tools, using the latest technology, thinking about change management, these are evergreen, right? Like these these are not throwaway investments. These are not things that solely set you up for tariffs. These are things that will improve the health of your business, improve your competitiveness, your profitability, your efficiency, and set you up not only to compete in a world of tariffs, but make you more resilient for whatever disruption next becomes. Well said. All right, well that wraps up the presentation for today. On the screen are a couple of resources, some case studies that we have produced here at Source Day. If you’re interested in learning more about Source Day and some of the successes that we’ve had with a few of our customers as well. So you can find those on our website if you go to the resources section and then in the type field type in case studies, you can see all the case studies. To connect with Robert or Michael directly, their emails are up on the screen. And again, we will send out a recording of this as soon as it is available along with the polling question results. And we thank you again for joining us for this great discussion and we hope to see you again. Robert, thank you for your time and your expertise. Always a pleasure. Thank you. Really appreciate it, Michael. Thank you, Dono.
