TROND: Welcome to Episode 86 of the Augmented Podcast with me, futurist Trond Arne Undheim, host of the Augmented Podcast. I'm sitting here reflecting on season two of the Augmented Podcast, which we started to bring industrial conversations that matter, serving up the most relevant conversations on industrial tech with a vision of a world where technology will restore the agility of frontline workers. Our goal, in a sentence, has been to try to augment industry with our reflections, networks, and tools. 

In season one, which I'm not going to reflect much on today, we had guests spanning a wide range of backgrounds, from industrial leaders to investors to founders, educators, technologists, and academics. In season two, which is today's focus, we honed in a bit, covering on a bunch of specific topics relevant to manufacturing such as marketing, frontline operations, reshoring, digital lean, startups, supply chains, pricing strategies, the manufacturing software market, workers, the low-code/no-code issue, diagnostic manufacturing, operational data, life science manufacturing systems, the industrial tech transformation outlook for future factory, the evolution of lean, and industrial interoperability. 

As you can see, we ranged from technical topics to HR to investing to management principles, all of which goes into operating and innovating in manufacturing and industrial tech. I thought I would dive back into a few of the highlights from those episodes. Back in January, we had Joe Sullivan, who's a host of the Manufacturing Executive Podcast and founder of Gorilla 76, on the podcast, for a conversation about marketing. 

In Episode 64 of the podcast, the topic is Marketing Mindset in Manufacturing. Our guest is Joe Sullivan, host of the Manufacturing Executive Podcast and Founder of Gorilla 76. In this conversation, we talk about marketing tips for manufacturers, best practices from foundations to demand generation, and distinguishing yourself by consistency which leads to developing a distinct voice that leads to emotional incentive via lead development, to the challenge of achieving business outcomes. We cover the role of people and technology jointly in accessing and achieving business goals for manufacturers, and we uncover key industry trends.

JOE: Probably the thing I hear the most, which is not a surprise, is, hey, we need our lead qualities low or the volumes low. We need better or more opportunities coming in the door. Even over the last year, where the manufacturing sector has been doing generally well, and companies are growing, you still have companies that are facing this longer-term transition from the things we talked about earlier where, you know, they  "Well, we used to just kind of rely on referrals, and some of that stuff's dried up and ownership has changed." Or "We would go to this trade show every year, and we were kind of reliant on that to come back with opportunities, and that show is canceled this year," or whatever. 

And so it usually comes down to how can we fill our pipeline with more and/or better opportunities? And that's where that conversation starts about well; we need to shift our mindset about how we're getting to those people. Marketing needs to play a role in helping you get in front of your ideal customer profile. And those who are actually in a buy cycle and looking for a solution right now and vetting companies, we need them to find you. And you need to be discoverable by them. But that's probably a very small percentage of your audience. 

In most cases, probably less than 5% of a company's audience is actually in a buy cycle right now. And you can't just go out there and push sales messaging at them because they're not buying. Like, I just bought a new car this summer for the first time, and I don't want to admit how many years. It's a long time. I'm not in buying mode for a car. I'm not going to receive...like, that message is not going to resonate with me when I'm watching a football game. You know, I'm watching Monday Night Football, and a car commercial comes out. I'm tuned out, whereas six months ago, it was different. 

So you have to find a way to look at the large percentage of your audience that is not in buy mode right now and be able to create some value for them and understand what matters to them in their job, but do it in a way that is not salesy in nature. And that's how you build brand awareness. It's how you build trust so that when people enter the buy cycle, you're the first one they think of. 

So I think this kind of all stems from we need to capture demand where it exists and that satisfies lead generation. We need to be in front of people who are buying. But then, in the background, you need to be building brand affinity and reputation for the rest of that audience. So a lot of these conversations center around these things. You need to take what's in the brains of your experts, your engineers, your technical professionals, and you need to create content around that, and publish it, and give it away for free and let people consume that content. 

So much of the buying process is happening before you're ever going to have a sales conversation. That's just the reality. There's enough data out there to support that at this point. Make it easy for your buyers to engage with you and to buy from you. Because if they can't find what they're looking for on your website or with your digital presence but they can with your competitors, who are they going to call first? 

It kind of breaks down...the marketing approach that we believe in can be broken down into kind of three steps. The first one is to focus. The second one is to create, and the third one is to distribute. And so what that means is one, when we're talking about focusing, it's just so important that you dial in on the right type of person from the right type of company. Understand you may serve ten different industry verticals or types of companies. But where are you going to focus from a marketing standpoint? You got to channel your resources in some way. 

So pick a customer segment where you know you can be successful, understand deeply who the buying process influencers are inside those organizations and what those people care about. What are the common questions they're asking on sales calls? What are the issues that they're experiencing? 

We're major advocates of doing customer interviews upfront. Like, talk to 10 customers that represent your ideal customer. Talk to five more that you've lost deals with that you wish you had won and understand what it is that makes these people tick, what their buying process looks like, what they are looking at, what they care about. That will feed your whole marketing strategy if you start there.

TROND: In Episode 54 of the podcast, the topic is Industrial Pricing Strategies. Our guest is Lydia Di Liello, CEO and Founder of Capital Pricing Consultants and also a co-host of The WAM Podcast, where empowered women interview empowered women. 

In this conversation, we talked about the pivotal principle of pricing, which has become even more important as the industry is reshaping itself due to technology, change, risk, and globalization. What is the role of tech in the pricing space? And why is it not as effective as it should be? What about the hardware and software pricing? And how to use the discovery analysis and recommendation framework that Lydia Di Liello has developed. We discussed industry best practices and touched on a few case studies from NCI to JCPenney, and covered the future look.

LYDIA: I would say the field is 30 to 35 years old in terms of having been established. And I think the way it was established really was The Professional Pricing Society kind of came into being to address that need. The gentleman that founded it, Eric Mitchell, had worked for, I believe it was the Ford Motor Company and said, there's a real need here. People are just essentially throwing up numbers to see what sticks. There was no AI back then. Analytics was Excel spreadsheets at best in most cases. So the depth and the breadth of what we now consider to be analytics, I don't think, really existed. 

And I believe the companies that are going to be the most successful in business are those that are tying supply chain and pricing together. When you look at how you are procuring a good, what does it cost you to bring that good into your organization? That's your raw cost. How many times do you handle it? What's involved relative to then passing it on? Are you adding value to it? Are you just purely taking the widget and passing that widget directly on to your customer? 

So knowing that...obviously the old adage of what's your cost side? Okay, that's old hat, if you will. Everyone's used to talking about that part of the supply chain. Where I think this is unique is when you talk about at what price point you go to market. So often, those two things are never considered until the end of the quarter when we true up all of the financial statements, then we say, "Wait a minute. Oh, gee, the cost went way up." 

Now we're chasing a price increase to try to make up that cost increase. Where to your point when you talk about the buildings industry, I think by their nature they were already very closely aligning supply chain along with pricing because they had to relative to their raw material cost, basically, is their business if you will.

I think the single biggest mistake that all B2Bs make is that they always want to just do cost-plus pricing or margin-derived. So either they're saying my cost is X, and I'm going to add a 20% margin, and therefore, my price is 1.2 essentially. Or they will say, I need a margin of 30% minimum. Therefore, everything is set at 30%. And they don't look at what their business customer actually needs. 

What are they actually delivering to that business customer? They're not looking at the value proposition, which is also a blend of art and science for me, Trond, and something that I always define with my clients. Because what a company believes they're delivering to their customer is very often not at all what they're delivering. 

TROND: How is that?

LYDIA: So a manufacturer that I worked with was doing custom plastic bags. And they believed what they were offering the customer was, in fact, a customized plastic bag. No. 

TROND: That was not it?

LYDIA: Not from my perspective, no. What they were offering was, in some cases, it was a specific sales mechanism. So it was a vision to the customer. So it was about packaging. It was about presentation. It was about could it stand up and sit upright on a shelf so that a customer saw it directly as in a food packaging? 

If it was gold earrings, they were offering the jeweler the opportunity to keep the product on the shelf without tarnishing because they put anti-tarnish chemicals into the bag itself. So it's very much about addressing what that specific product is doing for your business customer and not just the thing you think you're selling.

TROND: In Episode 68 of the podcast, the topic is Industrial Supply Chain Optimization. Our guest is Professor Yossi Sheffi, Ph.D., and Director at MIT Center for Transportation & Logistics. In this conversation, we talk about what the future of supply chain holds. We discussed the role of tech, especially robotics and automation, and discussed the need to improve but not get rid of just-in-time production. 

We talk about the China Plus One approach to supply chain diversification, the use of scenario planning to prepare for long-term effects of guacamole demand. And we discuss which corporations have done well-doing supply chain disruption and explore how supply chain startups move in to solve supply chain challenges. Lastly, we discussed what the next decade and beyond might look like and pondered the macro forces that impact the supply chain.

DR. SHEFFI: You have to move, you have to store, you have to manufacture, you have to source, you have to process. You deliver and worry about how to get it back. More than half, about a little more than half of the cargo that flies goes in the belly of passenger airlines. Business, in general, is not totally digitized. Supply chain universities are not totally digitized. Supermarkets are not totally digitized and is not ready to be. It's not clear that it will be.

Let me give you some examples specifically about the supply chain. With the pandemic, when Zoom and everything else started to be a thing, I mean, who ever heard about Zoom before the pandemic? But we started to have more and more video calls. People thought, okay, air travel and especially business travel will never come back. It's not true. 

Because look, when you have a supplier in China...people still have suppliers in China, and Vietnam, and Malaysia, and South America, whatever. To close a deal, to make a deal, to keep the deal going, it's not enough to do a video call. You need to fly out there and negotiate the deal and have dinner with the other party and talk about your kids, or grandkids, or spouses, and what you like to drink, and whatever, create relationships and create trust. 

When you say moving out of China, think about it. Go back to the first question you asked me, is it a network, or is it a chain? It's beyond network. It's an ecosystem. It's suppliers, and their suppliers, and their suppliers, and their suppliers, and tens of thousands of those for each company until you go either to the...if it's an agricultural product, you go to the field. And if it's a hard product, you go to the mine. You get everything from the mine until you have a finished product. Many suppliers and warehouses, and transportation, and custom regimes, and whatever... 

China supplies, you know, 80-85% of the world with rare earth minerals. You know which country has more rare earth minerals than China? It's the United States. But in the United States, environmental law don't allow mining for it. And the shortcoming is that the forecast is always based on the past. So as long as more or less the future will act like the past, you can forecast the seasonality. People will buy more towards Christmas. People will buy more candies before Halloween and so forth. 

Okay, you can forecast based on past behavior. However, when there's a fundamental change like what happened during the pandemic or things that happened during the financial crisis when there's a big change in behavior of people, this all goes by the wayside.

TROND: So, taking all of this into account, then, what is the future of supply chains? Let's be specific. If you look ten years into the future, it's not something that academics always promise to do, but you have, and you are in some of your work. Taking all of these things into account, the relative kind of [inaudible 16:46] I guess, of long-term strategy in the U.S., some other countries around the world doing the right thing, arguably the European Commission perhaps stimulating countries to do some correct things in the industrial strategy there.

DR. SHEFFI: Yes.

TROND: Isolated countries like Israel or South Korea are doing the right thing. Where are we going to end up over the next few years? So play out COVID for a little bit; play out some of these startups working on this. Where are we ending up? Will there be massive improvements in supply chain? Is there guacamole demand all ahead of us the next decade? Or is there any structure to the madness?

DR. SHEFFI: I'll tell you why it's a tough question because I think it has nothing to do with supply chain. If you tell me where China, where Taiwan will be in 5 years or ten years is it going to be...where would the U.S.-China relationship be, U.S.-Russia, EU and Russia? I think global political forces will swap anything that we can do in business, not only in supply chain, in business in general. 

But assuming that there will not be a disaster on the magnitude of the pandemic and worse, I don’t know; I just read Kissinger, who thinks that we are at a very, very dangerous point in U.S.-China relationship. He thinks we can be on the step of a war. And a war between the U.S. and China would be the end of humanity. 

TROND: In Episode 60 of the podcast, the topic is Reshoring. Our guest is Harry C. Moser, Founder and President of the Reshoring Initiative. In this conversation, we talk about what reshoring is, why it is important now, what data there is on it, and we find out what the Reshoring Initiative is and what they have accomplished. Lastly, we discuss the implications of reshoring and what the future holds for manufacturing. 
I'm curious, what would you say are the biggest drivers now of reshoring?

HARRY: Several things. First, China is obviously a big piece of the offshoring problem. And Chinese wages have risen 10% to 15% a year for the last 20 years. So they've gone from almost so low you couldn't count them to being today, maybe a third of the U.S. level, depending on what skill level portion you're talking about. And so it's gotten high enough that even before COVID, even before the trade war, work was flowing out of China. And the only question became, does it go to Vietnam, Cambodia, India, or to the United States? The simplest one is foreign direct investment. 

So a company that is headquartered outside the United States builds a factory and starts to produce in the United States, typically for the U.S. market or the North American market, very clear, very simple definition. All you need to know is who owns the company. Now reshoring, in contrast, is done by U.S. companies, say General Motors, as opposed to say Toyota. So it's done by a U.S. company. And the company produces or sources a product that previously was sourced offshore. So it had been offshored. Now it's reshored. 

So despite the conditions that we have, is to do the best you can with what you've got and convince companies that it makes sense. In some cases, we'd say 20% or 30% of what they import to bring it back to the United States to get them to do the math to figure that out. 

Again, my goal is to bring 5 million manufacturing jobs back, which is what it would take to balance trade, have exports equal imports, increase manufacturing by 40%. But to bring those 5 billion back, even in the most optimistic view, is a 20-year process...significantly the country that suffered from that process. Now, if you compare us to Germany with a big trade surplus and manufacturing being 20%-24% of their workforce as opposed to 9% or 10% here, Germany has won in that because they've managed to have the exports and not a lot of imports. And we have not much exports and a lot of imports. 

So we have been singled out in some ways. For example, if you look at China, their trade surplus with the U.S. is about equal to their trade surplus with the world. So it's almost as if they intentionally focused on us to be the source of all that money that came in to make things happen. And they have not applied their exporting efforts as successfully, and I'd say probably not as aggressively to Europe and to the rest of Asia and so on. 

Too many Americans have gotten lazy or sloppy or no longer appreciate the value of hard work, the psychological value of hard work, what that does for them. I always say we need to get people to work harder, work smarter, save more, spend less, and the country will be in a better place.

TROND: In Episode 79 of the podcast, the topic is The Future Factory. Our guest is Gunter Beitinger, SVP of Manufacturing, Head of Factory Digitalization, and Head of Product Carbon Footprint at Siemens. In this conversation, we talk about digital transformation of the factory floor. 

Digital Transformation talks start with the word digital, and for you, that's not an obvious choice. It strikes me because you start from the people angle, and you say, okay, you've been influenced by the lean process tools.

GUNTER: Many times, the digital transformation is seen from the technology point of view. My point of view I would always prefer to come from the value-driven point of view, which means what problem you would like to solve and what is the root cause of it? And what is the best process, and which technologies are serving these process? 

The technology, when you think in this way, is exchangeable. What today can be the right choice and the right technology might tomorrow not be. But you don't make the technology as the main purpose of doing anything. The process is...maybe it's just giving a very strange example. Maybe cutting by water beam seems a solution to cut something very efficiently, and you have at the same time the cooling effect. Maybe this is good at the moment, but then later, there comes other laser technologies which are not heating up the material, and then you can replace it. But still, you are thinking about which problem you wanted to solve and not making the technology its purpose.

TROND: Season two was exciting because we are broadening the number of topics, bringing in a larger network of people, and we are starting to build an ecosystem. This concludes my reflections on season two. Stay tuned for some best of episodes over the summer. We will return in the fall with new episodes. 

Thanks for listening. If you liked the show, subscribe at augmentedpodcast.co or on your preferred podcast player and rate us with five stars. 

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