Innovation and Creativity in Supply Chain Consulting

Conversation with the 2022 winner of The Society for the Advancement of Consulting (SAC), Corrie Shanahan Memorial Award for Creativity and Innovation in the Profession, David Ogilvie, founder and principal consultant at David Ogilvie Consulting in Brisbane, Queensland, Australia.

In this episode of Interlinks I talk to David Ogilvie, Principal at David Ogilvie Consulting in Brisbane, Queensland in Australia.

David is this 2022 winner of the Society for the Advancement of Consulting’s, Corrie Shanahan Memorial Award for Creativity and Innovation in the profession.

In his work David with business clients David helps CEOs and CFOs to transform their business operations assisting them to maximise their ERP investments, which are these Enterprise Resource Planning software systems that many businesses use to organise, coordinate and plan their business operations.

David brings a unique approach to bear with his clients that differentiates him from other consultants in this area.

Click here to read transcript

Patrick Daly:                     Hello, this is Patrick Daly and welcome to Interlinks. Interlinks is a program about connections, international business, supply chains, and globalization, and the effects these developments have had on our life of work and our travel over recent times. Today on Interlinks, we’ll be talking to David Ogilvie, Principal at David Ogilvie Consulting in Brisbane, Queensland in Australia. In his work with his business clients, David works with CEOs and CFOs to transform their business operations through helping them to maximize their ERP investments. These are the enterprise resource planning software systems that many businesses use to organize, coordinate, and plan their business operations. David is also this year’s Society for the Advancement of Consulting’s Corrie Shanahan Memorial Award winner for Creativity and Innovation in the Profession. So, delighted to have you here with us today, David. You’re very welcome.

David Ogilvie:                   Thank you very much for having me, Patrick. It’s good to be with you again.

Patrick Daly:                     So David, could you tell me in overview about your background and career and how you came to be an independent consultant in around 2014 I think it was?

David Ogilvie:                   Well actually I eventually went out on my own a lot earlier than that, but way back when, I actually grew up in a small family business. So I was in business with my mother and father, and unusually my dad was a publican, so he owned hotels. And so I was in the grog trade for a lot of my growing up and my early career. So my dad bought his first pub when I was five and I was working behind the bar with my mother when my dad had a back operation when I was seven. And I did that for about three or four years until he actually got back on his feet. So I’ve been in and around family businesses for really all my life.

                                           And so the family got out of that business back in the early 1990s and then I was a little bit of a drifter looking for what I was going to do and I happened to be on a sales trip with a business that I was running with another relative of mine. We were in the technology space then, and I caught up with a guy that I went to university with and he actually said to me, “David, I’ve always wanted to get in business with you, and I’m going, “Really? Doing what?” He said, “Consulting.” And I said, “Oh, don’t be silly. I don’t know anything about consulting.” And he was smart enough to say, “David, you know more than you think you do.”

                                           So cutting a long story very short, he and I went into business for a while. Like many of those partnerships, they don’t necessarily work out very well, so I lost a business partner, I lost a friend, but then I was at another T junction in my life and I thought, what am I going to do? And I thought, you know what? I’m really enjoying this consulting business. And back in 1999, I made the decision to keep going. So it was when I joined the SAC Community and Alan’s community back in 2014 as where you probably got that date from, but I’ve been doing this pretty much nearly all of the 20s.

Patrick Daly:                     So you mentioned SAC and Alan, what is that and who is he?

David Ogilvie:                   Okay, well, SAC is obviously the Society for the Advancement of Consulting, which you and I are obviously members of and you and I both won our respective awards this year thanks to that society. And Alan Weiss, of course, is a mentor of ours and he’s the gentleman that started the Society for the Advancement of Consulting.

Patrick Daly:                     And a lot of the work you do, and I mentioned in the introduction, has to do with these ERP systems. So why are these ERP systems important and what are some of the major considerations and challenges that companies face when they’re either implementing these for the first time, they’re changing them, or they’re upgrading them?

David Ogilvie:                   Well, it actually goes back to my experience again when I was working for in our own business, because my university degree was a business degree and I happened to do an Information Systems major. And it was after that experience at university that we started to actually apply technology to our own business. So we were one of the first hotels in the area to have electronic cash registers. We connected those cash registers to electronic nip measures, as in spirit nip measures, and to flow meters and so forth on our kegs and all that sort of stuff. So we did our inventory control and management using an actual software system. And that’s where I sort of gleaned, I guess, the benefit that a business gets from an application, a well implemented application of software. And so when we got into consulting and we were doing supply chain and manufacturing consulting in the first instance, supply chain and ERP and the software that drives the business tend to go hand in glove in many respects for me.

                                           So it’s really important for you to be able to get many of those supply chain improvements that you’re looking to get in a business. A lot of that is driven by the way the software actually runs the business. So your procurement settings, a lot of those configuration settings, the way you’re running your warehouse operations, the ERP system drives a lot of that, production scheduling, the whole gamut of a manufacturing business and a distribution business is driven by an ERP system. So they are really, really important.

                                           The challenge, of course, Patrick, is that the industry has a horrendous failure rate. There’s only about 15% of ERP implementations really deliver high quality outcomes for those clients. It has a bad reputation and there are millions and millions, if not billions of dollars wasted on a lot of these implementations. So it’s an area that I guess I’m on a little bit of a mission to try and improve the areas that I can have my footprint across the clients that I work with to make sure that those sorts of poor results aren’t delivered to them.

Patrick Daly:                     So you’ve written a book, something along the lines of the 14 Deadly Sins of ERP Implementation. So what would be, I don’t know, two or three of those most salient deadly sins?

David Ogilvie:                   Well, the first issue is to buy the right product in the first place. And ERP selection is another process that is fraught with danger and landmines. It is not uncommon for a CEO, or a CFO more particularly, they often get charged with the responsibility of managing these sorts of projects for companies. For some reason IT sits under the finance space, but anyway, the CFOs are normally charged with that. And one of their first steps when they go out when they need a new ERP system is to just reach out to the industry and start talking with software vendors, rather than really understanding what business improvements they’re looking to make. So that process of having a structured process of gathering your requirements, taking that to the market is not very well handled. So that’s the first one is choosing the wrong software.

                                           I guess another one is having inadequate or insufficient resourcing within the business. All too often, ERP systems are implemented part time, they don’t necessarily have full-time teams. The reality is an ERP implementation can be the most strategic decision a company will ever make and it is absolutely critical that they have the very best people they’ve got in the business working on that project, because when they go wrong, they go catastrophically wrong and that can put the viability of the business at serious risk. So strategically, they are probably the most important and that demands having the best people in your business working on that sort of project. So, that’s another deadly sin in many ways.

Patrick Daly:                     How would you describe how your clients are better off after working with you?

David Ogilvie:                   So I won’t say that ERP projects, when they work with me, are trouble free because that’s just not the nature of the business. But what they do get is an implementation that is, how do I put this? Runs a lot smoother in the sense that if we get the right foundational pieces in place, so for example, we’ll do due diligence on the team that the vendor is going to put on the project. What we really need to do there is to understand where the consultants that are going to be working with us on this project, where they’ve gained their experience from.

                                           For example, are they an accountant who has moved to a software vendor and has very little experience in, say, a food manufacturer as opposed to a discrete manufacturing? It’s really important we understand where they’ve got their industry experience, well firstly if they’ve got any industry experience, and secondly, if they do, where they’ve got it from. Because what can happen is that a consultant on your project will do nothing more than just configure the software the way they configured it on their last project as opposed to understanding your business and what are the critical components of the way your business operates, what your competitive advantages are, and then being able to apply the way the software actually operates to enhance those competitive advantages. And if you don’t do that sort of due diligence and you don’t understand where they’ve got their experience from, and if you don’t have a good cultural fit with that software vendor, that can go awry and go awry very quickly.

Patrick Daly:                     Okay. So I guess now we’re in the age of ERP systems and I guess most businesses have one in some shape or form, but what do you think is the future of technology and businesses and where are things headed with, for example, AI and Industry 4.0 and the integration of objects that are in the business into the software systems, say for the purposes of data analytics and automated decision making? So what do you think the IT solutions of companies might look like in five or 10 years’ time?

David Ogilvie:                   Interesting question. I’m not sure that they’re going to look, within five years’ time, all that different. And I say that because there are a number of topical topics, if you like, and you mentioned one before, AI. Now AI requires a very clean data set in order to learn. Now, it will learn in the long term to be able to distinguish between dirty data, if you like, and a clean data set. But in order for that AI or that machine learning to actually learn effectively and efficiently, it needs a clean data set. And the reality is most organizations’ data sets aren’t very clean at all. So it will take quite some time for an artificial intelligence or a machine learning algorithm to understand the way the business operates and what’s a good decision and a poor decision.

                                           There have been a number of AI projects that I’ve been around, particularly in the forecasting space, that seems to be a natural area where the machine learning should be able to look at past sales data, should be able to look at past seasonality, it could look at weather patterns, it can get data from all other sorts of sources that might be influencing demand, and theoretically it should be able to provide some clear and sensible forecasts. But unfortunately the reality is that none of those have really produced any successful outcomes as of yet.

Speaker 3:                        93.9 Dublin South FM.

Patrick Daly:                     Tell me a bit more about the Society for the Advancement of Consulting and the award that you received this year. So what is that, SAC, that organization? And tell me a little bit about how you came to win the award, which I think is specifically for creativity and innovation for this year, 2022.

David Ogilvie:                   So the Society for Advancement of Consulting is a global organization. So we have consultants from all over the globe who are members and there’s quite a rigorous process, A, of being nominated by your clients or associates in the first instance. And then you need to follow through with justifications of the work that you’ve done. There’s a rigorous process of your clients being interviewed about the results that you’ve managed to achieve with them. And then ultimately a board makes the decision on whether you are suitable for the winner or not.

                                           Sorry, Patrick, what was the other part of your question? Oh, and why? That’s right. So I guess because ERP is such a dry subject, it’s a bit like finance in many respects, it’s not the most exciting or sexy topic on the planet, I approach these projects significantly differently to a lot of my competitors. And that’s because I guess over time I’ve learned that the normal practice in this space is not producing the outcomes that the clients deserve or demand, hence the 85% failure rate. And so I started to think, how can I do this differently? And so I’ve developed IP around both the selection process that we spoke about there that is quite different. Again, I focus as much on relationships as I do on functional requirements.

                                           And when we do look at functional requirements, rather than having a massive spreadsheet full of inane little, can you do batch shops? Can you do AP? Can I email an invoice? We really focus on that competitive advantage piece around the business. What makes this business tick? What makes it different? Because at the end of the day, the ERP system needs to support and enhance those competitive advantages. And so that different approach is one of the ways in which, I guess, I’m innovative in my industry. Along with, I developed another piece of IP called the ERP Success Formula, and that is understanding what it takes to make a project successful and we can take a heat map along the project along the way, and we do audits around how the projects are progressing to make sure that we give them the best chance to be successful.

Patrick Daly:                     A lot of these systems, I think, have best practices probably built in already and then as that tension arises, and you mentioned about matching what the specific business needs, so in terms of changing the system to suit the business or changing the business to suit the system, where do you come down on that in terms of, I guess one, efficiency in getting it done and two, in terms of it actually supporting the business in the future?

David Ogilvie:                   Sure. There is no doubt that the ERP systems will sell to a potential client that they have best practice built into their systems. Unfortunately, the reality is coders and developers are not practitioners. And so it depends on who has designed the solution. And often they have a good practice, not necessarily best practice, built into the system. And you’re quite right, for a long time I was challenged by the question around whether you should do process mapping, do an as is and a two be or a could be around that before you do an ERP selection. The important piece is you need to understand what outcomes you are wanting to achieve and what improvements you’re looking to make. That is the key piece because at the end of the day, whichever solution you do settle on, they will come with a process. And then it is a matter of understanding where the gap is between how you currently do that, perform that process, and the way that the software then performs that process.

                                           And then the question remains is, how much of a change is that? How much does moving towards the software’s process, does that put our competitive advantage at risk? Now, I’m not an advocate for modifying the code on ERP systems, I think that creates a lot of problems further down the road for organizations. However, if there is a case for modifying code, that is the one, and if you’ve got a competitive advantage over your competitors and the ERP system does not facilitate that or enhance that, then that is the one case where I think you should be modifying your system.

Patrick Daly:                     Now looking out into the wider world at the moment, we’ve spoken about this a few times, there are lots of challenges out there in the aftermath of COVID, we’ve a land war here in Europe, you have tensions in the Asia-Pacific region between the two big powers, the US and China. So what do you think are the major considerations, risks, and opportunities that businesses should have in mind as they look forward into 2023?

David Ogilvie:                   Well, it’s interesting because, as you know Patrick, I also do a lot of supply chain work because I think the two go hand in glove. And at my last business owner and CEO executive lunch that I run on a regular basis, I was asking the questions of the people who attended, if China does invade Taiwan and Australia and the US, as we expect, will step in, what will that do to your business when China stops supplying you? And I think that is one of the big questions. It is not easy for a lot of organizations to decouple themselves from China. There’s a lot of talk about reshoring, near shoring, and there’s some activity happening around that in the US, I know as some have said, but here in Australia, the governments have been talking about bringing manufacturing back to this country.

                                           There’s a lot of issues there around that. I personally don’t see it happening anytime soon. And the major reason for that for me is energy policy. Energy is just getting more and more expensive. And if we are going to move away from a low labor cost country like China and bring it back and have to pay the higher wages that we do in this country, then the way around that to get some productivity improvements will be to automate and all of that automation’s going to require energy and that energy’s getting more and more expensive. So that’s a real quandary that executives need to look at going forward.

Patrick Daly:                     And are Australian executives looking at other neighboring countries like say, Indonesia, Philippines, Malaysia, as alternatives to China?

David Ogilvie:                   Yeah, well many of them are already in Malaysia and those sorts of places. Vietnam has come on a lot of people’s radars of late. As have some of the South American countries, they’ve started to become on the radar as well.

Patrick Daly:                     And how has COVID changed your business and the way you work and interact with clients?

David Ogilvie:                   Well, I must admit, I’m very fortunate from a COVID perspective. My business more than doubled in the COVID period. And I guess a lot of that comes down to the fact that executives needed to make some informed decisions and quickly, and they very quickly realized that they didn’t have the quality of data that they needed to make those decisions. And so, many organizations have very quickly pivoted and said, “We need a better use of technology.” And as such, my business has exploded.

Patrick Daly:                     And do you work internationally or is it something that’s part of your strategy plans for the future given that you’re in the world of technology and technology’s making it possible for us to work across distances? Like today, we’re talking, I’m in Ireland, you’re an Australia and we could be sitting in a room together.

David Ogilvie:                   Correct. And so before COVID, I did actually have an international business, so I did have clients internationally. I always have said that my geographic region is the Pacific Rim, so that’s any of the countries that sort of face the Pacific Ocean. So that’s West Coast US, Australia, New Zealand, Singapore, Vietnam. There are countries where I’ve had clients.

                                           COVID has prevented me from traveling obviously until just recently and we’ve started to travel again. But working in manufacturing and warehousing, I’m sure you would appreciate, Patrick, that you glean a lot about an organization by walking the floor. It tells you a lot about the organization. And so while technology does give us the ability to do a lot of the work, it doesn’t give me the opportunity to glean what I need to from a site visit.

                                           So mentally, I’m across what’s actually happening in the organization. So going forward for all projects, even internationally, I do at least one, preferably two site visits. We can do the mechanics of the project, digital… Using technology. Pardon me, I’ve got a mouthful. We can do it using technology, but nothing beats being on the ground, I’ve got to say.

Patrick Daly:                     Sure. And outside the business then, what kind of things do you like to do in your spare time?

David Ogilvie:                   I’m a rugby tragic and unfortunately the Wallabies are not my friend at the moment. That, and I guess I’m a typical Australian, I love the beach. The surf and the sea water seems to invigorate me. So whenever I need some time or some reinvigoration, I shoot myself down to the beach and swim and surf.

Patrick Daly:                     And reading or listening to anything currently? Books, audio books, podcasts that inspire you that you’d like to share with or recommend to listeners?

David Ogilvie:                   Actually, I’m very keen on two podcasts, apart from your own of course. I’m keen on Michael Gervais’s podcast, and the name of it has just escaped me off the top of my head. But the other one I like is one called Hidden Brain by Shankar Vedantam. And I’m just trying to find Michael Gervais’s now, it’s called Finding Mastery. They’re the two podcasts that I glean a lot from. And reading, I actually picked up Audible recently and I’m relistening to Atomic Habits and I’m finding that very, very, very helpful.

Patrick Daly:                     Excellent. So where can people find out more about you, more about your work, and how can they contact you?

David Ogilvie:                   Well, the simplest way would be my website and that’s just davidogilvie.com.au. And Ogilvie is spelled O-G-I-L-V for victory, I-E.com.au. And it has all my contact details there. You can sign up for my newsletter there. And that’s really the best place to… You can even book a call with me on the website.

Patrick Daly:                     Excellent. Well, thank you very much, David, for talking to us today. It’s been an absolute pleasure.

David Ogilvie:                   Thanks for having us, Patrick. Great to be with you.

Patrick Daly:                     You’re welcome. And wish you the very best for the future, both professionally and personally. Thanks again also to our listeners for tuning in. So until next time, keep well and stay safe.

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Patrick Daly Interlinks Podcast

Interlinks is a programme about the connections, relationships and supply chains, that underpin the globalisation of our modern world.

In each programme, we interview people from around the world including entrepreneurs, executives, academics, diplomats and politicians to get their unique perspective on globalisation as it has affected them both personally and professionally.

There is a little bit of history, a dash of economics, a sprinkling of business and an overlay of personal experience both from me and from my interviewees from around the world.

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