Decision Intelligence in the Supply Chain with Fred Laluyaux

Patrick Daly:
Hello, this is Patrick Daly and welcome to Interlinks. Interlinks is a program about connections, international business supply chains and globalization and their effects on our life, our work, and our travel over recent times. Today, on the show, we’ll be talking to Fred Laluyaux, president and CEO of Aera Technology. Aera Technology is a Silicon Valley based decision intelligence company. The company’s Aera decision cloud integrates within existing systems and data sources to help business with technology enhanced decision-making in real time and at scale so that they can achieve sustainability, effectiveness and efficiency in the context of the high degree of complexity in their supply chains. So, welcome, Fred, again. And thank you very much for being here with us today and this time in person right here in Dublin.
Fred Laluyaux:
I know, thank you very much for having me. Glad to be here.
Patrick Daly:
So, Fred, what actually brings you to Dublin then? Is Ireland an important place for Aera Technology’s international business?
Fred Laluyaux:
It’s becoming more and more important place. I remember I was here a few years back doing a conference in Dublin, but now we’re visiting customers and prospects. So, some large international companies have some of their operations here or some local companies. So, we’re doing a busy visit of prospects and customers.
Patrick Daly:
Excellent. So, we were just checking before when we spoke previously, so it was in September 2022. And if people are interested in that, so we spoke more about what decision intelligence is. We spoke quite a bit about the technical side of how it works. And that interview is in the archives back 6th of September 2022. It’s called decision intelligence, if anybody is interested in going back to that. But can you remind our audience maybe briefly what decision intelligence is and why companies and supply chain teams need it?
Fred Laluyaux:
Yeah, sure. Maybe I’ll start by the why and now I’ll say what it is. The context around decision intelligence is the augmentation of the business cycles, combined with the consumerization of our economy where decisions have to be made at a very low level of detail and [inaudible], with the increase in the complexity in decision making. And this is all driven by digitization. So, digitization drives acceleration, business cycle, decision at lower level of impact and complexity. And that creates a dramatic increase in the volume and the complexity of decisions that enterprises have to make in general.
Why supply chain and why supply chain professionals looking at decision intelligence, is because one of the area of the enterprise that’s the most impacted by this acceleration, by this consumerization, by this increasing complexity is supply chain. And the answer is decision intelligence, which is the digitization, the automation and the augmentation of decision making. Think about all the decisions that a planner in supply chain or logistician is going to make on a daily basis to make the supply chain run flawlessly. Well, a lot of this work can be done digitally, allowing the operators to actually focus on the corner cases, the complex use case or decisions that they have to make, but a majority of the work can be digitized. And that’s what decision intelligence is all about.
Patrick Daly:
Okay. And are we talking about frontline operational decisions that need to be made quickly or are we also talking about business decisions that are more strategic in nature?
Fred Laluyaux:
So, IDC came up with a very interesting set of metrics. And they’re looking at 65% of decisions at what they call scenario decisions that have to be made within hours. And they correlate that to the fact that 75% of enterprise data is obsolete within hours. So, you have your data that basically helps you, the decisions are that you make to design your network. Those are slow decisions that require a lot of what if analysis. They are the decisions that scenario decisions that as I said, have to be made within the day. And then you have the real time decisions. And I’ll talk about that in a second.
So, the bulk of the augmentation of decision making is in the latter two categories. You don’t redesign your network every day. And this is where decision intelligence is very critical. The second element to that is when we engage with a client, we’ll look at the decision that they’re currently making, but maybe not fast enough, maybe not accurately enough, maybe not at the right level of granularity. Leading to, I don’t know, an available to promise state that’s not accurate enough. And leading customers to cancel the orders. I can go through many, many examples.
So, first category, decisions that you currently make, not well enough, not fast enough, not accurately enough. But in this digital world there is a lot of the new types of decisions that have to be made. I’ll give you an example. If you’re a consumer packaged good company, now more than 50% of your media spend is digital. You’re creating hundreds of thousands of digital assets and those are campaigns that you will find promoting a bottle of soda or shampoo on TikTok, on Facebook, on the different digital media. There’s now technology to analyze the performance of that campaign. And you can now correlate the performance of a digital media campaign with the availability of the product on the shelves in the store or at the distribution center where the campaign is having an impact.
And now you can actually inform the need to increase or decrease the volume of the campaigns that you are making, or you can actually decide to reassign it or to rush inventory down to the point of sell. This decision didn’t exist five years ago. It exists today. And it’s impossible for human operators to actually cope with the volume and the speed. So, just to summarize, two types of decisions that are going really fast. The decision that you’re currently making, as you’ve historically been making, planning, execution, optimization, but these new types of decisions that are literally born in digital world and executing digital world.
Patrick Daly:
Interesting. And it’s a fast moving area, because we go back 2017 maybe Aera Technology was an early innovator at a time when this category, this market category probably didn’t even have a name, decision intelligence. And it wasn’t particularly defined. And that has changed quite quickly as awareness has increased and worldwide brands are now prioritizing decision intelligence in their own digital transformation journeys. So, what are you seeing now and what has surprised you in the shift over the last say six, seven years?
Fred Laluyaux:
So, you’re absolutely right. When we started Aera and we talked about… I’ll give you a fun analogy and then a full anecdote, I should say. When we started, June 19th, 2017, I posted a blog, launching blog saying welcome to the self-driving enterprise. And the first image on that short paper, I think you can still find it online, maybe it was in.com, I don’t know, it says, welcome to the self-driving enterprise. And it starts with the image of a self-driving car. And it says this is a self-driving car and what it will be is able to run autonomously without a driver, blah, blah, blah. And then the next chapter was this is a self-driving enterprise. And the self-driving enterprise will be able to run and make decisions at scale completely autonomously, learn from them and get more accurate over time.
Just about the time where Aera Technology was able to really fully execute on the vision of the self-service supply chain and self-service enterprise with some of the world’s largest companies, which basically, nine months ago or a year ago, you started seeing in San Francisco where we’re based, autonomous vehicle driving the streets with no one in them. And I remember doing my first video. They started during the night, between 10:00 PM and 5:00 AM, they started picking up passengers. And now you have 1,500, I believe, cars driving the city, I can show you a video later, completely with no one in them. And it’s interesting, because I built that analogy between the self-driving enterprise and the self-driving car and you had to wait six years basically.
I’m not negotiating the month here, but in six year window, this massive investment in technology enabled the self-driving cars to become reality in our city. And at the same time the self-driving technology became a reality. So, six years seems like a very long time, but it’s not. It’s been six years of investment. What’s remarkable is six months ago, it’s the acceleration that we’re seeing in the last six months. We went from engaging with large enterprises in having to explain what decision intelligence is to, as I like to say, what it is and why do you need it, to now organizations telling us, yeah, we got this. We know what it is, tell us what you can do to help us deploy it now and very fast.
And that inflection point has been hit about six months ago and you can see it with adoption, you can see it with competitive landscape. I think Gartner says in their recent study that by 2026, which is tomorrow, 75% of Fortune 500 will have been deployed decision intelligence as a competitive weapon. 75% within three years, that’s remarkably fast. But like everything nowadays, a new trend, whether it’s enterprise or fashion or music, whatever, it deploys really, really fast around the world. That’s one aspect. Sorry, just to finish. The other aspect is the globalization of that trend.
It used to be being in the enterprise software and performance management for a long time. Used to be that it would start in some industry, in some pockets in the US and in part of Europe. The adoption of decision intelligence is global. It’s not limited to a few countries. So, that’s another thing that we haven’t seen before is this trend now. I can explain it, I think I have an explanation, but this trend is becoming global very fast.
Patrick Daly:
Okay. You may remember the last time we spoke about perhaps a gap opening up between those companies. So, maybe the 75% of Fortune 500 companies who get this and they’re on board and the others getting left behind. So, what challenges remain in terms of awareness and adoption out there among the wider demographic of companies?
Fred Laluyaux:
I’m more exposed to those who know what it is and want it than to those who are not. I’ll tell you the type of companies that are basically not interested or not showing the big sign of interest are companies who are… We don’t really need to improve the way they perform in their supply chain. Or so, some companies that we’ve been exposed to that are in the luxury good industry that are like, “Hey, we like to think through, we like scarcity, we’re managing that.” We are all about building very big brands and delivering an experience, which may actually be sometimes based on scarcity, which is very different than if you are a FMCG brand who is shipping and serving billions of consumers every day. So, I think the companies that are more interested by decision intelligence, they are the ones that are high volume, high velocity.
The ones who are less interested are probably the ones who are slower actor in the market. But I think today the market is fueled by two things. The first is the element that I described earlier, which is the impact of digital in the economy, is driving necessarily the adoption of decision intelligence. I call that the undercurrent. This is something that’s not going to stop, but there’s an undercurrent of change that’s fueled by digitization. Now there’s also a tidal wave that’s coming. The tidal wave is what’s been more visible in the last few months, which is a lot of our customers have had growth fueled by either COVID or inflation. And most of the companies we meet today in our industries that are captive for decision intelligence are saying we need deficiencies. And the volumes are not growing, but the price has been going up, so we look good.
But they know that there is a risk that this phenomena is going to start coming to an end the next six to nine months. And there is a rush toward efficiencies, because as I said, the growth has not been fueled by volume or it’s been artificially fueled by if you’re in selling computer equipment coming was very nice to you. But that’s over. So, I feel like we’re back in 20 years ago when companies were like, we need to be careful to reduce cost. And the next wave of efficiency cannot be yet another reorg, another data lake, another planning tool. It has to be something different, because people are maxed out. Business operators are maxed out, they can’t do more. So, how do you get to the next level of efficiency? You have to try something radically different.
Patrick Daly:
And are the initiatives, are they coming from CTOs, CFOs, CEOs, or all of the above?
Fred Laluyaux:
It’s really all of the above. We’re engaging a lot with the chief supply chain officers and they all have people in charge of digital transformation of their supply chain. We’re engaging a lot with CEOs, we’re engaging a lot with CIOs, we’re engaging more and more with CFOs. And the reason why, is we are engaging with CFOs, is they’re the ones that maybe have been asked to drive that optimization.
Patrick Daly:
They can see the numbers.
Fred Laluyaux:
They’re the only efficiency play. And a lot of these efficiencies sit at the intersection of the different functions of a company. You may have streamlined your supply chain, but within the supply chain there’s still silos. But the example I give you earlier that connects media spend to supply, or connects your supply chain to your finance, or to your procurement, this is where you find the biggest gaps. And this is usually where a global function, be IT, digital or finance, has a say and has a play.
Patrick Daly:
Okay. And how would you describe the Aera decision cloud platform and what sets it apart in terms of improving and automating decision making?
Fred Laluyaux:
So, we’re talking about something that’s not been done before. Digitizing tasks and processes is a known practice called RPA. And there’s nothing new there. It’s been deployed by most companies for the last few years. But in the case of decision intelligence, we’re talking about digitizing decisions. We’re talking about, excuse me, changing the way the work is getting done. And that opens a whole new set of possibilities. It’s a very fluid work. So, the way we make decisions is something that evolves all the time. So, we designed our platform to enable our customers to actually “safely” go from manual to semi-automated, to fully automated decision making. And we are giving them the ability in our platform to scale. So, a lot of clients have tried and have done some sorts of decision intelligence in a given process, in a given market, but they are coded that capability.
And when it comes to either modifying it, because the way you think is evolving, or rolling it out on the global scale, they need a platform. So, that’s what Aera decision cloud is, is the platform that enables you to start and scale decision intelligence in a way that’s “safe.” By safe, I mean, I’m going back to the self-driving car. You use that a lot today. But if you’re going into self-driving car, you need to ability to actually put your hands back on the wheel whenever you want to. And if you think about deploying this kind of technology that connects the digital brains to your nervous system to take action, decision intelligence takes action, you need to be able to control what the brain is doing. You need to make sure that the connection is happening in real time. And you need to at any point in time, you need to be able to actually put your hands back on the wheel. And that’s what the Aera decision cloud allows our customers to do.
Patrick Daly:
And how has ChatGPT and the popularity of AI enabled technology changed or influenced the work you’re doing now?
Fred Laluyaux:
So, that’s a really good question. My answer might be a bit controversial. Everybody’s asking us the question. When we launched Aera seven years back or six and a half years back, we launched Aera as a digital agent. Era Aera literally called Aera, four letters like Siri. That’s by design, we wanted Aera to be a digital agent. And Aera is a voice, Aera speaks on your phone, Aera can engage with you proactively. And if you look at our website, it’s all about an Aera engine says Ellen Aera, I’m engaging with. For us, we see the ChatGPT as a nice way to help develop that vision. But we have built our technology as a digital agent that does the work for you, that learns with you, that automates some of your work at the personal level at work. So, I think people have been looking at this technology sometimes with a bit of disbelief and now that ChatGPT is out there, I think folks who are like, yeah, that’s not possible.
What Aera says, they can’t do it or they can’t do it at scale. Certainly, that CEO goes and says, well, I think it’s possible. So, even though all credibility has got nothing to do with ChatGPT, I think it helps open up a little bit the mindset that if this is possible as a CEO, I get my speech ready using ChatGPT, I do believe my CDO or my head of supply chain will tell me that we can deploy a digital brain to actually make the supply chain decision. Even though the two technologies are very different, I think it helps with the enterprise psyching, so to speak. People are a little bit more open to it. However, having said that, leveraging those generative AI technologies in what we do is also very, very interesting. And we’re doing that.
Patrick Daly:
Okay. Last year in June, I think it was, I was at an event in Amsterdam. And some of your people there were there with one of your customers setting out a success story. So, are there any customer success stories that you’d be able to share with us today?
Fred Laluyaux:
I can share with success. We are super, super careful not talking about what our clients are doing with the platform. However, I can share some of the stories that our clients are sharing themselves. Which one was it that you… Unilever?
Patrick Daly:
Unilever, correct.
Fred Laluyaux:
That’s a good example. So, Unilever has been publicly talking about what they’re doing with Aera. So, I can mention a few things. I’ll tell you, and we recently had, there was a very interesting article with Will Beery, the CIO of Mars, so I can talk a little bit about that. And [inaudible] and Colgate was on stage with us and Exxon. So, I can talk a bit about that. But I’ll go back to Unilever because it’s one of the most advanced companies in terms of decision intelligence. And I’m being very careful not to say things that they haven’t said. But I think one Carlos Parada was running the program for Unilever, talked about the fact that last year, so I’m talking 2022, we’re in 2023 now, Aera delivered 1.6 million recommendations to Unilever’s businesses. This year, there is going to be a magnitude more. So, we’re looking at 10 million recommendations.
There are 16 skills, which is basically areas of decision making that have been deployed that are alive at Unilever. Unilever is looking at deploying this technology to do things like a daily forecast at the skew location, skew location level on a daily basis. You can using sellout data from their retail providers. So, they’re taking it very, very far. We’re seeing customers, and maybe I can talk about not the specific points, but what we’re seeing across our customers is adoptions by the end users is very strong. So, you could think about, oh, wow, the end users are going to be threatened by technology like this and it’s not the case.
I think there is an executive buying as we talked about earlier, but the end user are seeing the technology coming as a relief. Because they know that they don’t have the time to do the work that they’re supposed to do and that this rollercoaster of wave of decision that’s hitting them is not going away. And their adoption across all these companies is pretty strong. So, I think Mars was talking about 98% adoption of the recommendations, automatic adoption of the recommendations. Those are very, very strong numbers.
Patrick Daly:
So, we might, as we come to the last few minutes of the interview, maybe change tack slightly. I might ask you one or two probing questions. So, you’re a successful person, but as we know, success is not straight line. And everybody faces setbacks in their career and their life. So, how do you approach setbacks and what do you do? What do you think? What do you say to yourself to get yourself back on track?
Fred Laluyaux:
Well, I’ve had my share of setbacks, but I think you have to ask yourself why do you put yourself in the position of potentially experiencing a setback in the first place. What’s your motivation? If you’re driven by a deep belief that what you are working on can help change the world, which is my case. I believe for many, many years that the kind of technology that we’re building will fundamentally, if you think at a very high level what the technology does, it enables companies to reduce efficiencies. As a result, reduce waste. As a result, optimize their carbon footprint and all this kind of measures that allow you to assess whether you’re doing the right thing or not.
You can be okay with a setback, because you know why. You know what you’re doing is very difficult. You know that it’s very risky and you’re going to just continue. So, setbacks, COVID was a massive setback for us. It was very difficult to continue to build the company, to keep the team together, to take care of your customers at a time where the market says, “Hey, come back later, because right now decision intelligence is not my priority.” But you stay the course because you know that there is a greater goal and a bigger ambition than just growing 10% year or 50% or 100% a year.
So, I think, I guess I’m talking more about the motivation versus the setbacks. But if you know why you’re doing something, it’s much easier to digest the setbacks than if you’ve lost your way. So, my advice to entrepreneurs is always figure out, do you truly believe in what you do, in the value of what you do? And then if you do, then you’re going to have the resilience and degree that allows you to persevere.
Patrick Daly:
And talking of COVID, has the experience of the last two or three years changed, refined or reinforced any of your own personal views, beliefs about work, about life, about business?
Fred Laluyaux:
Of course. I think there’s been a combination. I live in the United States, I think in the year 2020, it was COVID and there was more than COVID. We went through a set of profound change in society that were just quite extreme. We had COVID, we had the Black Life Matter, we had had change.
Patrick Daly:
January 6th.
Fred Laluyaux:
All January 6th, of course. All of that came at the same time and force you to reconsider why am I doing what I’m doing. So, back to my previous point, you have to really anchor yourself, because everything became so hard that if you’re not solidly anchored in your belief and on the ambition of what you do, being something else than just feel good about yourself. That’s one. The second thing is as a CEO and as an entrepreneur, I think I spent more time during COVID worrying and taking care about the wellbeing of the team and of our customers than I did before. Not that I didn’t do anything before, but it became a core dimension. And as a father, as a friend, as a CEO, I think it taught me to be a lot more open and talk about my vulnerabilities a lot more openly than this robotic CEO was trying to show the alpha part of him.
So, I think during COVID, you realize at some point that we all, I know it’s the right word, but “naked” in front of that threat and that the only way you can actually help people is by expressing internally inside your community, your company, expressing your vulnerability. And when people felt that, I think it was helpful. So, I think it changed that dynamic a little bit, bring the ties together. And it taught me that it was okay to be more vulnerable, whereas before that probably didn’t realize that it was okay to be that way
Patrick Daly:
Yeah, interesting. Thanks for sharing that. So, what’s next for Aera? What does the future of decision-making look like to you, your team and your customers?
Fred Laluyaux:
Well, I think when you build a company like Aera, you go through multiple phases of doubt and excitement and doubt and excitement. Is it going to work? Not going to work? Look at this customer is doing it. Oh, this one is not doing it. We’ve moved in the last six months, it’s the beginning of the year into a new phase. I talked about the undercurrent combining with the tidal wave. I think we are moving from the what is it, why do we need it to, how do we do it? So, for us right now, it’s kind of fun. It’s enjoying that moment where your technology has matured, meets the market, the market wants your technology, it’s faster and it’s an inflection point.
So, it’s a city a day, it’s five, six meetings a day, but this is fun. This is the part that I feel like you work really, really hard to get to that point. And now it’s really intense. Scaling is very difficult. Getting funding is complicated in this era of craziness in the financial markets. But it’s a fun phase for us. And I think we all at Aera are enjoying it with our partners and with our customers.
Patrick Daly:
Well, excellent. Welcome to Dublin. Thank you for being here and hopefully you’ll come back and see us again in the not too distant future. So, many thanks, Fred. It’s been an absolute pleasure talking to you here today.
Fred Laluyaux:
Thank you so much for having me.
Patrick Daly:
And thanks also to our listeners for tuning in again today. And be aware that if you enjoyed this episode, you can find a full series of over 130 episodes of Interlinks on Spotify, Apple Podcasts, Acast, and other major podcast platforms. So, until next time, keep well and stay safe.