Geoff Tumang, Director of Materials at Bisco Industries, Inc., joins this episode to discuss how artificial intelligence, machine learning and advanced technologies are being implemented into today’s distribution and procurement practices. Tumang emphasizes how data-driven processes and advanced technologies can establish supply chain resiliency and lead to enhanced procurement systems.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Hi Geoff. Thank you for joining us today.
Geoff Tumang, Director of Materials, Bisco Industries, Inc.
Hi. Thanks for having me. I appreciate it.
Fussner
Could you please introduce yourself to our audience?
Tumang 0:19
Hi, my name is Geoff Tumang. I am the Director of Materials for Bisco Industries. We're a broad line distributor of electronic components and fasteners.
Fussner 0:29
Geoff, I'm excited for this conversation today. I wanted to ask you about distribution practices. What's different today? Has the role of the distributor transformed over the last few years?
Tumang 0:42
I would definitely say so. The bigger push within our organization has been the transformation of utilizing the data that we receive, particularly from our suppliers and with our customers. Creating useful information that goes upstream and downstream definitely creates advantages for us, as well as our suppliers and our customers.
Fussner 1:05
It certainly seems to be all about that data nowadays. Everyone's trying to figure out, “How do we leverage that data as best as possible?”
Geoff, speaking of your customers, what are you hearing from your customers today? Are they facing any new challenges? Are they coming to you with new expectations or new demands?
Tumang 1:23
A lot of the challenges that they've been sharing with us are the increased lead times and how difficult it has been to anticipate that. I think a lot of the times when they're going out for quotes on their bill of materials, that lead time has increased significantly from when the project was first being created, to where the actual procurement quantities or production quantities are coming into play. The extended lead times have really created issues for them as far as planning and how they're going to proceed with meeting their deadlines.
Fussner 1:58
From Bisco's perspective, how do you help your customers address that problem and have a better grasp of lead times, or keep that line of communication open to understand part availability?
Tumang 2:12
As far as communication goes, we have a lot of great supply partners that have been able to share the difficulties they've been having within their facilities. We have such a large sales force that is actively engaged with their customer base to share what's going on and hopefully adjust the expectations of the customer, keeping everything very reasonable and relieving some of the pressure that we have with our suppliers.
Fussner 2:40
Geoff, a different question I wanted to ask you… We talked about data being a big topic right now, but what is being done with that data all comes down to the new technologies that we're seeing with integration across every industry, whether it's AI or machine learning. Has Bisco been able to implement any newer technologies or advanced technologies, and if so, how have they helped address your distribution practices?
Tumang 3:05
We have a proprietary ERP system that we use. I think that machine learning definitely comes into play as far as our procurement practices go, analyzing a lot of the consumption rates, customer usage, things like that. Still very basic, but those are the things that help us be efficient and make sure that we have proper inventory coverage.
As far as it goes for the customers, I think it's really interesting, because a lot of the time, all these new technologies are coming out, but how does it get implemented at the buyer's level? We meet with a lot of CEOs, and these are the things that they're talking about, but how does that actually flow down through the organizations? Fortunately, because we have our ERP system, it's highly customizable and we can provide them with information that they could load into their systems, creating a better value proposition for Bisco, as well as the customer with our relationship.
I think that the AIs at the moment, your basic ones that are readily available out there on the internet, they can create efficiencies, but we all have to be mindful that you still have to be a subject matter expert when it comes to the topics that you're utilizing it for. It's not perfect at the moment and I think that as technology gets better, it gets more refined, we're providing it more data, we're understanding what causes it or what drives it to improve our processes, it's going to create a lot of efficiencies. But at the moment, it's something that is a gray area for a lot of us, and whoever can standardize that process is going to yield pretty big benefits in the future.
Fussner 4:51
I couldn't agree more. Like you said, it's a transformation; it's a process getting these technologies integrated efficiently so that they work for all parties involved.
Tumang 5:01
I recently graduated from USC Marshall with a master's in global supply chain management, and throughout that whole program, it was very heavily data intensive. We looked at AI and machine learning, and it's all about how if you're aware of what that technology is, how it exists today, and what we can utilize it for the future, how is it going to create opportunities for any business out there? Which is fantastic. I just think that, again, it's going to take a lot of time and a lot of expertise to refine that, to make it a tool that anyone can use. I don't think it'll ever replace the workforce. It's only going to make us more efficient.
Fussner 5:50
I'm sure it's going to take a while to get everyone on the same page. This is something that's new to so many people. AI has been around, but not everyone has had their hands on it. And so, it's going to take a while to get everyone involved at the same level so that it's working for all parties.
Tumang 6:07
It's interesting because when I think about our industry and the tenure that exists, a lot of the new workforce coming in is familiar with these items, and they're more well versed. And so, even internally, there's a little bit of opposition of, “How does AI come into play with our day-to-day practices?” And I think that through education and understanding, we can utilize it in all very positive ways. It shouldn't ever be seen as something that would replace an individual, especially in distribution.
Fussner 6:47
Has Bisco been able to offer any new capabilities, skills or services to help their users better manage their projects?
Tumang 6:55
As a value-add distributor, we have a lot of different things that we can do to help the customer with their efficiency. There's not necessarily one standardized item that we're finding across the board that everyone is looking for. We're very open, and again, because we have such a customizable ERP system, we can provide them with the visibility that they need to make strategic decisions, and also in turn, that creates efficiencies within my procurement teams and my inventory practices and how our sales team engages with the frequency with their customers.
Fussner 7:36
A couple years ago, every industry had the big eye-opener with COVID in terms of supply chain disruption. How does your company prepare to be able to better manage any certain supply chain disruption that they may face on the horizon?
Tumang 7:54
For us, I believe that we're very unique in the way that we have our internal practices that follow a very strategic discipline. Throughout the pandemic, we never laid off anyone. In fact, we've never had customer layoffs in the 51 years that we have been in business. Through that stability and creating systems that are manageable and that can provide lots of value to our customers in the form of great customer service, has really yielded us benefits throughout the entire pandemic. We never let off the gas. We kept bringing in inventory. We kept hiring people. And post-pandemic, we came out even stronger. A lot of market share was gained throughout that, where I think that there were a lot of reactionary items based off profits with other organizations.
We stayed true to what our principles are, and we remained consistent throughout that. I think that if we continue to do so moving forward, and really looking at our data, our customer usages, and working with supply partners and really homing in on what is the correct inventory to have at any given moment, I don't foresee us having large issues with any sort of disaster affecting us—short of the Internet doesn't work anymore.
Fussner 9:22
I think we'd all be in trouble there!
If you could offer some advice to your customers, what would you tell them? How can they be better prepared to navigate certain supply chain disruptions that they could face?
Tumang 9:36
For our customers, they have to determine who are their key supply partners. I don't think that they should put all their eggs in one basket, per se. Supply chain resilience, especially now in today's day and age, is absolutely everything. Having a backup source, having multiple suppliers that you know you can rely on. We've seen a lot in our industry with acquisitions and merges of different distributors, and while they're going through those phases, as far as integrating multiple business units together, I think that we've seen some organizations lose some opportunity because they haven't been able to pivot as well. But for us, we have remained consistent.
And I think that if the customer is willing to share as much data as they can with their suppliers, then they will get the most value out of them. Because, again, it's that upstream and downstream information flow that's going to allow their production teams, their planning teams, their procurement teams, to make the correct decisions, know when to bring in the inventory, and then also, from a distributor standpoint, “How do I always have the right amount on-hand all the time?” If they can share the production quantities, if they can share how many pieces go into every item that they're manufacturing, it's all pretty easy to figure out with all this technology that we were talking about earlier. We have all the tools. It's just a matter of being willing to share the information.
Fussner 11:12
Communication certainly is key. It does come back to that data. It's just a matter of how do you turn it into actionable data? You have to have that conversation.
Tumang 11:21
With the actual data, it's funny… Everyone is so guarded because they're concerned. But again, establish a great relationship with your supply partners or the customers to their distribution network or who they prefer to work with… EDI is out there. We can make all the correct decisions for them. We can reduce the stress on their internal processes.
A lot of distributors do a great job at the ‘just in time’ still. Now, lead times haven't always been our friend within the most recent past years, but I think that the planning and moving forward, if we can share the information, we can stabilize everyone's production and their whole supply chain.
Fussner 12:18
It's an important perspective to take, and it's a big conversation that needs to be had. It really comes down to building trust with those that you work with and building trust between your partners.
Geoff, another question I wanted to ask you about: Recently, we've seen some setbacks and delays in the construction of semiconductor fabrication facilities here in the U.S. What do you think that means for distributors, their customers or the market as a whole?
Tumang 12:48
Semiconductors. It's a very interesting supply chain in itself when you think about from when the raw materials are mined to where they end up in the consumers hands. I understand the efficiency of the items as it works, so its processes, being manufactured, going back and forth. We're starting to see more of a shift, at least that I have seen, where semiconductor manufacturing has been moving to locations like Southeast Asia. We've also had it reshored back in the United States. My mom was actually a manufacturer of semiconductors, she worked in a clean room, so I am very familiar with this stuff.
But with all the disruptions that have been happening, the world's demand for semiconductors cannot be met at the moment. I feel like manufacturers are picking and choosing who gets access to the product. The global investment, in order to be able to support the level of the entire world's needs, is in the trillions of dollars.
From the Bisco end of things, a lot of our customers actually make the fab equipment to manufacture, and we're seeing a shift in where the product is going from their manufacturing locations. And also, the quantities have changed significantly. I think that the shortage of semiconductors has created an environment where, unfortunately, the manufacturers get to dictate who gets the product and where things are going, and it's allowing access to the speed of bringing items to market, which has created difficulties. And I think as far as supply chain goes for distributors, we're not necessarily on the top of the list when it comes to who gets product. And for the contract manufacturers that we work with, the small to medium manufacturers, it's causing a lot of disruptions for them because the availability of product is allocated to the larger organizations.
Fussner 15:04
It's a crazy market to keep an eye on. It's something that everyone's looking at, of course, and how it's going to play out, what the domestic production is going to look like… It seems like it's going to happen, it's just that these setbacks could cause some serious delays and some chain reactions depending on when this starts to get up-and-running, domestically, for more production.
Keeping that forward-thinking focus in mind, I wanted to ask you: Are there certain verticals or certain industries that come to the top of mind that could be set up for some serious growth over the next six to 12 months? Or, conversely, do you see any industries that could be facing some challenges in the near future?
Tumang 15:50
In regard to the growth over the next six to 12 months, for Bisco, we've seen a lot in the aerospace and defense markets, especially with the electronics. Unfortunately, for a lot of manufacturers, if you weren't participating in that five years ago, it's very difficult to get into that industry now. A lot of the time, the designs are a little bit older, the bill of material, the qualifications for being on the bill of material, that has really passed for immediate opportunities for anyone looking to gain in that industry. It's a slower route, but when it does go into production, the yields are pretty good.
As far as other industries that we have seen, it's a lot of communication, 5G. As the needs and demands for that change, just bringing the Internet to the middle of the woods, basically, I think everyone's trying to figure that out. And it's a competitive market to the point where it hasn't been as cost-sensitive, because it's a race to, one: get the network going, and then, two: how do we get the consumers the products within their hands? From what we have seen within the immediate, that those two areas for opportunity have been where we have been seeing a level of growth and believe that we would continue seeing so over the next six to 12 months.
Fussner 17:30
I want to ask another forward-thinking question here. It's a big one. What's the future look like? I know it's almost an impossible question, but I'm curious, what should stakeholders in the electronics market be prepared for come 2025?
Tumang 17:50
I think that there's going to be a lot of green initiatives around ESG, sustainability and things like that. One of the things that I think for the c-suite executive level, is that it is evolving to the triple bottom line. It's people, planets, profit. And those items are not mutually exclusive. When we're looking at the sustainability initiatives, just from my experience, through education, we've had a lot of CEOs or chief supply chain officers come in and talk about what the future lies in, what they're looking to procure, and who are the companies that they can partner with that are going to reduce their greenhouse emissions, and those types of items. I think that that is probably where the industry is going to go. And if you're not mindful of it now, you're going to fall short in the future.
When we had those speakers come in and they were talking about it, it was interesting, because some of those chief supply chain officers, they're actually customers of ours. And the difference that you see from the procurement level with the day-to-day buyer to the CEO-type level, it's very different. The ideology that they're trying to implement within their organizations doesn't necessarily translate. I think that creates a huge opportunity for distribution to shape what that looks like. I think that as far as the decision-making process that we have with new suppliers that we're working with, the opportunities that we're bringing to our manufacturers based off of what our customers are looking for, we're going to see a lot more of that shift. How do we make it easy for them to make the decisions? How do we make it so that when they're building out their bill of material for the next product offering, who are the right suppliers that they should be talking to with their engineering teams in order to have a more “green” bill of material?
I think that that's really where the largest opportunities for us lie. It is in consumer electronics. And then just across the board, one of the most staggering stats that was shared with me was that the general public believes that over 80% of corporate responsibility for green initiatives should come from CEOs. What does that tell us? I believe the general public just says, “Hey, guys at the top, just make good decisions. We'll keep buying the thing.” But there's a value proposition behind that. When you look at it, over 60% of people looking for jobs look at the sustainability efforts around that employer. That's a huge number for the incoming workforce. So, it's not just about, “How do we create a product that's better for the consumer?” but also, “How do we create an environment where our employees can take pride in participating in it?” I think that's really huge.
