The intersection of AI, sustainability and supply chain transformation

 How is the energy transition reshaping global supply chains? In this episode of Energy Transition Talks, CGI experts explore how AI, digital twins, and sustainable energy are driving real-time agility, resilience, and progress toward net-zero. From Michelin’s planning shift to industry-wide collaboration, get insights on building the supply chain of tomorrow—today. 

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Chapters

• 0:00 Welcome Back - Citizen Supply Chain Series
• 0:37 Client Example - Michelin's Evolving Approach
• 2:28 Data-Driven Decision Making & Digital Twins
• 4:39 Supply Chain Resilience as Growth Predictor
• 7:07 Collaborative Ecosystems & Catena X
• 10:31 The Vision: Proactive vs Reactive Systems
• 12:12 Closing Thoughts & Purpose-Driven Supply Chains

Transcript

Peter Warren: 0:04

Hello everyone, Welcome back to part two of our series exploring how we are discussing the citizen supply chain. In part one, we talked about what a citizen supply chain is and we did our best to define it, because it's a very wide and complicated component. We finished part one with Charlie giving a great definition of how this is moving in and impacting and how companies are looking to adapt to this. Helena, I promised we'd come back to you in part two and pick up with some client examples. Are clients changing the way they're looking at supply chain? Is it something they care about? Are they doing it every year? What's happening?

Helena Jochberger: 0:37

Yeah, definitely, there's a lot going on, and I would say let's pick one of our large clients, michelin, as one of our oldest clients, and the way they looked at their supply chain in the past was in the average frame of three to five years.

Helena Jochberger: 0:51

Meanwhile, and also after the pandemic, this has changed to a really very short-term perception on looking at the supply chain, namely in two months, so three, four months and sometimes even down to weeks, and that means, of course, when you want to look at your supply chain and even take changes, so take your supply chain to a more agile point of view so that you're able to switch from supplier A to supplier B that needs the data for it.

Helena Jochberger: 1:18

So, of course, the endeavors that we have taken the last years between 2010 and 2020, where we were talking about Industry 4, the fourth industrial revolution that continues to take place, because what has been there in these first 10 years of digital transformation was that we had a lot of proof of concepts. Right, we had proof of concepts in various parts of the value chain, might it be in R&D or in the production, or also in the after sales. But what is still missing here is also what we call industry five, or the next level of industrial revolution, namely becoming fully data driven as an enterprise, throughout the entire enterprise, and that demands, of course, a systems integration from the various core systems. You have to generate that systems interoperability and that data continuity and that, by the way, is not only within my own company the case, but when we're talking about ecosystems, we need to extend that data continuity throughout the ecosystem, and I think in so far, the supply chain is really also pushing that next level of transformation right now.

Peter Warren: 2:28

I know that we haven't mentioned the ever popular word of AI, but we do see that that demand for data. People are applying that to their ecosystems now their supply chains, to determine what moving forward. So I guess when Michelin was looking at their supply chain every couple of years, data wasn't a key factor. So it must be exponentially more important to them. Are they looking at using new tools, or are there ones of your clients looking to use new tools for this type of function?

Helena Jochberger: 2:54

Definitely, I would say, first is and this is what we see throughout the globe currently the homework of getting the data strategy and the data management or data governance in place. I would say that is the foundation. Once this has been built, then, of course, we can climb the knowledge ladder so that we can introduce really advanced analytics within the supply chain, and then we are getting in the area, or in the domain, of scenario planning, multi-scenario planning so think about a digital twin, for example, if you have just the IT or the virtual representation of the physical chain and then bring AI into the game and come up with all sorts of recommendation, also in terms of financial aspects, by the way, when we talk, for example, if supplier A is not able to deliver that or to bring that from A to B in that timeframe, what kind of financial loss do I have as a company? What kind of maybe liabilities do I have? What kind of penalties do I have? So these aspects, I think, are very important and on the other hand side, what we also saw from our voice of the client analysis this year quite clearly is that double-sided coin.

Helena Jochberger: 4:01

On the one hand side, due to that, in parts of the world economical crisis, I would say we need to be very cost efficient. So our manufacturers are very sensitive when it comes to cost. They need to have their return on investment in months Earlier it was years for their investments and on the other hand side, they want to diversify into new markets with new product lines. So that means, of course, you need to do some sort of consolidation also in the chain, in the supply chain, in the vendor chain. So this is more the financial engineering part. And then you need to have the money for investment to go into diversification, where you need the strong chains to be able to produce, to be able to source the raw material and such. So I would say it's the two sides of the coin.

Peter Warren: 4:47

Yeah, I agree with you, and Diane Gushu just published an article that we'll be putting out there about digital triplets. You talked about the digital twin. For those that don't know what a triplet is, a digital twin is modeling a process and you might have a series of those. The triplet looks at a series of those as input to make a third or fourth decision. So if I'm looking at my supply chain, but I'm looking at also my energy demands, I'm also looking at my HR factors. I might have individual models of each of those. The triplet is the third thing that says what's the business importance of me for this factor? What is the outcome of all of those? What should I consider doing next based on all of this disruption? And we see a big play of that. Charlie, you've got a cross-industry viewpoint of everything that we do. How do you see that coming together from not just a manufacturing or my selfish needs of energy and utilities? How do you see that kicking across all the industries you look after?

Charley Wark: 5:39

Well, actually I saw one interesting report coming out from the Harvard Business Review. If we circle back to the importance of the supply chain Harvard Business Review in September I think it was identified the CEOs that they have interviewed identified the supply chain resilience as a key factor to predict whether or not a company was going to have growth over the next three years. So if you take what you just have digital twins and digital triplets Clearly that is a sign of a company that will be set up for a future growth. So this is important today and it will become even more important in the future.

Peter Warren: 6:42

So with that change, cooperation across industry, I think, is becoming a reality. I know that for me to predict energy demands, we've got some emerging things where we have connections to key clients saying, hey, you're going to run your factory now and I might have a surplus in the future. You can run things then, but I think the tight-knitness of this is going to have to accelerate. What's your points of view of that? Either one of you have an idea.

Helena Jochberger: 7:07

Yeah, let me bring into the discussion the concept of the data spaces or of the collaborative ecosystems, and I think we have seen nicely that with ecosystems like, for example, german-founded and funded a Catena X solution, so that goes under the European Gaia X umbrella. The need for data sovereignty on the one hand side, so that every participant can decide which data is going to be shared. The data security on the other hand side, but the strong will for partnerships or for collaboration is key. Katina X was, in so far, an interesting example because this has been founded in 2021, just in the middle or after the pandemic.

Helena Jochberger: 7:50

First of all, large automotive OEMs joined forces and said our chains, our supply chains are so weak and we have one of the most complex supply chains in the world, so how could we do better? And so they formed, but not only in the automotive space. No, they took also tech corporations on board, like SAP, like BASF, chemical companies and others, and meanwhile this whole concept spreads. So the entire technological and platform foundation has been built. Cgi has also been a partner from the very beginning in actually two use cases. So the one is around the digital data passport, so to have a clear denomination where a part comes from what kind of CO2 footprint it had and such. So that's more coming from the governmental need.

Helena Jochberger: 8:39

But there is the second use case which I found personally in our discussion even more interesting, and that's called the demand and capacity management use case. So how can we join forces, not only the OEMs but also the tier X suppliers in the chain to really have a breathing supply chain? So, according to the demand that comes in from the order side, how can we ramp up, ramp up and ramp down in times of need? And this is a little bit where we are still lacking, also in the business model of production. And we hope, of course, by onboarding more and more suppliers. And that whole thing is spreading right now via hubs in France, via hubs in North America, in China, in Japan, so that we hope, with the onboarding of these suppliers, that we get really traction into that data ecosystem so that the effective collaboration and the benefits will show. So this is just a little example, but I'm pretty sure, peter, you have ones in your industry as well.

Peter Warren: 9:37

What I like about the Katina X example is they didn't just look at the automotive industry. There's elements in there for the energy market and so on. And when you talk to our counterparts, our peers in both the insurance industry and in the financial industry, if we had better connections to them, if I understood my risk profile better, I might get better rates. So can I share data that tells my insurer that I'm having lower risk here, so charge me less? But could I also share that data and say, hey, you've got a risk there that you're not covering and here's your exposure from a business standpoint that I could offset for you. Similarly, if I had better data to the banking, could I give you a better rate, because you really are investing in the types of things that I want to invest in, and I'm seeing this.

Peter Warren: 10:19

Not just a yearly report. You say that you did this, but not just a yearly report. You say that you did this, but how could I do things in more real time? And I think, charlie, this is where you were going to. It's into this ecosystem, this supply web or supply ecosystem of real-time data sharing, beyond what we're moving forward, what we're currently doing.

Charley Wark: 10:37

Let's dream here, guys. Imagine if we, as a citizen, would be able to see our own personal data that exists anywhere in the public sector. Imagine if we, instead of having to go and ask questions or be educated on if I'm allowed to apply for I don't know, a student visa to a country or a student loan if I'm a student, a student visa to a country or a student loan if I'm a student. Imagine if all of those things would just happen automatically, just with smart contracts that's built into a supply chain or a supply web of information, of my personal data. I think that, my friends, would be the end of bureaucracy in this world. So, if you want to dream big, I think that could be a vision that we could also give our listeners today.

Peter Warren: 11:31

It's proactive, it's not reactive. How do so and I like maybe this is a good point for us to end on and I'll give you both a chance to sort of wrap this up but this is moving beyond the mundane, beyond the reactive, beyond whatever, into a proactive environment which requires the cooperation like a Katina X. It requires the realization that I'm not in a bubble. I am part of a larger story. I'm part of the citizen supply chain and, like Charlie, your point earlier, understanding my role as an organization is a key factor of this. It's not just my selfish view of what I want to do, it's how I'm actually benefiting the rest of the world With that. Would either one of you like to start with a summary and we'll head towards the end of this?

Charley Wark: 12:12

Well, I think, peter, you already started.

Charley Wark: 12:14

My summary is like sorry to steal it for a company to understand their part in the citizen supply chain I think that will be crucial but also to be able to leverage the technology that already exists and have existed for a really, really long time, where we have the ability to leverage technologies like AI, blockchain, smart contracts, all these kind of things, to create a better environment and a better future for, you know, citizens, and also for the companies that operate within our countries. I think that is it's our duty to come or show all the opportunities and possibilities that are out there.

Helena Jochberger: 12:58

And just to add what Charlie just said, because I really like that the duty on the one hand side, but it can give also purpose. Yeah, if we know what crucial part we play in the criticality of a functioning society, that can can give you purpose. And I would say we are challenged with so many things around in our industries and our societies, and believing in the power of strategic partnerships, believing in collaboration and interdisciplinary collaboration, this is something for me, or my takeaway, where I want to believe in and that is the world I'm working for.

Peter Warren: 13:32

That is a great summary from both of you. I'd like to thank you, charlie, and thank you, helena, for participating today, and thank you for everyone that is listening in on these things. Feel free to contact us if you have any thoughts or feedback on this, and thank you for your time. Bye-bye.

Helena Jochberger: 13:46

Thanks for listening, bye-bye.