 Hey, welcome back to Las Vegas. Lisa Martin here covering Koopa Inspire 2022. Keeba's really happy to be here at this event. About 2,500 folks are here, which is great to see. I have two guests from Microsoft with me. Please welcome Jonathan Allen, the Director of Global Network Modeling, Design and Planning, and Cassie Wong, Senior Global Network Model and Design Engineer. Guys, thanks so much for joining me today. No problem, thanks Lisa for having us. So let's talk about what's going on at Microsoft, the Microsoft supply chain. Supply chain is a term that's on everyone's lips these days for some interesting reasons, but talk to me a little bit about the Microsoft supply chain and how does it scale to meet the needs of the business? Yeah, Lisa, you know, it's really an interesting design at Microsoft. When you look at all the products we service from Xbox consoles, controllers, Xbox games, Xbox Live cards, Surface devices for retail customers, for consumer customers and commercial customers, and then the way we go to market to distributors, retailers, and direct to consumer homes, we have to have a supply chain that actually executes across all the products and customer needs based on seasonality. You know, when you think about our products, Xbox console, heavy Christmas, heavy consumer, heavy retail product, commercial devices for Surface, heavy quarter ends, heavy periods of time back to school. So we have to have a supply chain that effectively works across all of our products, all of our customers, and all the different seasonalities that we have to manage. And do so globally. And do so globally. So talk to me about the transformation. You know, that's a word that, we talk a lot about digital transformation, right? Before COVID now, we've seen the acceleration of digital transformation during COVID. We've seen challenges with the supply chain. Talk to me about Microsoft supply chain journey from a digitalization perspective. You guys gone through. Absolutely. Data, data is the key. And I have a philosophy which is around managing your business by facts and figures. And so when Cassie first came on, about a year and a half ago, our focus was on digitizing our supply chain. So how do you take our physical supply chain, digitize it in a way that you have a digital mapping and duplication of what's happening physically in a digital way across the supply chain? So about every single day, we're grabbing in about 500 gigabytes of data that then allows us to understand the physical and the virtual world of our supply chain to understand how it's moving, how it's executing, and how it's delivering. As for example, we were able to, when the war began in Ukraine, to understand where our trains were, how they were moving, and if they were continuing to move versus stopping. On the second side, we're leveraging that data now to make decisions about where our supply chain is today, which is really focused in the changing environments that are real-time occurring. That's driving opportunities, whether it's about reducing carbon, whether it's driving cost down, or whether it's servicing the customers to make real-time decisions. While at the same time, planning for three to five years out, based on our growth, our projections, and making sure we'll have the right infrastructure, partner supply chain in place to service with those changes in growth. Basically, you need a crystal ball. Basically. Yes. And, Cassie, it sounds like from what Jonathan just said, you joined the team during the pandemic. Yes, I am. So during a time of massive change. 40 remote. Yep. And fully remote. Talk to me a little bit about that and some of the opportunities that you saw in helping the supply chain modernization. Yeah, definitely. So when I joined Microsoft, it's great time, right? And it's all the risks and challenges and dynamic changing environments that's really involved. So we spent a long time, like from the time I spent, from the time I joined Microsoft, we spent the time to set up this digital chain of our supply chain. So really to transform what is happening physically to how do we see it digitally. So just to bring the visibility of the supply chain. So the great thing is we are able to leverage the tool from Kupa on all those, like the digital transformation and also supply chain design optimization tool to help us really build the digital twin and also the model for Microsoft device supply chain. Now interesting comment. So when I met Cassie, the first time I met her was in person when I interviewed her. Second time I met her in person was here at Kupa. And I was afraid I wouldn't recognize her. Of course. Challenges of the last year. Talk to me about, speaking of challenges, talk to me about some of the challenges that Microsoft saw and said, we need a partner like Kupa to help us eliminate these challenges if we don't have time. Real time is no longer a nice to have. We've got to have, we've got to be able to transform. So we have that visibility in real time. Absolutely. When you think about time, time and decisions, you know, overnight cities get locked down in China. Cities get locked down in Europe. And if you wait days or wait hours, that could be the difference between product on a boat, product on a plane, or product not arriving to support your customer needs. And then the question is not only that, with that real time, how are you making decisions? Real time to change to alternate ports, alternate airports, right? Making changes on the products you're making to make sure that, you know, I was making this, but now I should make this because I have a risk of getting product to shelf. And you've got to do all that with very limited amount of time. Of course, because there's the consumer. I mean, we think about the Microsoft on the business side, but the consumer side, you mentioned some of the consumer products, Johnathan, the Xbox, the Surface. Consumers, one of the things that was really in short supply during the pandemic, and probably still is to some degree, is patience. The consumer experience is so critical for a brand. Correct. As is the employee experience. Talk to me a little bit about, from a supply chain digitization perspective, what was some of the executive sponsorships? Who were some of those executive sponsors that were involved in going, yes, we need to move in this direction with Koopa, and it's got to be now. The real supporter behind that is my manager, Jeff Davidson, and then his leader, which is Donna Wharton, where they are truly about what are we doing next? How are we going to leverage the tools and the capabilities that are provided by others that allow us to do our job? So let's be clear on, let's use those that are designed to do what they're supposed to do, and then build where we need to. And that was the big difference was the digitization of the data. Create the data, create the information so that we could then leverage the tools to create the information, right? And that information is then about bringing the facts, the information and the data forward to have very fact-based conversations, which is back to manage the business by facts and figures. Right. Well, Cassie, one of the things that we've also learned in the last couple years is that every company is a data company. If they're not a data company, they're probably not going to be around. I even think of my grocery store and all the data that they have on me to be able to surface up. What did I buy last time and I want to buy that again? Talk to me a little bit about why Coupa, why was Coupa the right choice to help facilitate this data strategy so that the visibility in the supply chain and the ability to tweak things on demand is there. Yeah, so the main stuff that we're leveraging from Coupa are the data group and also the supply chain group. So data group is really, you know, enable us to really, like, for the people who do not have an intensive like data manipulation background, they can use data group very, you know, straightforwardly to like work on the data. So they can build, you know, they can grab the data transactional level and aggregate to the, you know, leadership level to see data in different, you know, aspects, tell the trends, tell the, to get the key information. So that's the power of, you know, getting the like massive data into on a level that's like everybody can see, oh, wow, this is what it means. And another is definitely leveraging the data to get into a model, which is what we just talked about, the digital twin of our physical supply chain. So we can, we're able to like make analysis based on, you know, very easy design, like sensitive analysis, what if analysis to test out what our future, you know, supply chain can be and what is the cost benefits, what is all the impacts on the lead times, on the carbons. So yeah, so that's the power of leveraging the data. Speaking of carbons, how is Microsoft working towards being carbon negative, zero waste? What's some of the things that are going on there from a corporate responsibility for? Yeah, that's a really important one. As known about two years ago, we came out with a pledge to be carbon neutral by 2030. 2030. And so, you know, the company as a whole is doing massive initiatives from different groups. But specifically in supply chain, we're constantly focusing on cutting our carbon footprint, whether it's the way we're making the products and designing the products, whether it's the way that we're designing our warehouses. So for example, just recently, we launched a carbon neutral DC in Europe, which is all solar panel based. We're about to do that as well on one of our US operations. We're working on other things that allow us to think about alternative pallets that eliminate the weight of wood to a much lighter pallet that has a huge carbon reduction when you think about shipping things via the air and the carbon impact there. So everything that we work on is really around three things, service, cost, and sustainability. And our biggest objective is really taking all three of those objectives and trying to bring them closer to each other so that the decisions aren't as large against each other when you make one versus the other. That's our objective. So how do we continue to move that ball forward, challenge the paradigms of the old that we're so accustomed to, and really move forward change? How does Cooper help with that? Oh, I can answer that. That's a good one. That's a good one. Yeah. So as John mentioned, Microsoft, our goal is to achieve carbon neutral by 2030. So traditionally, the trade-off might be between cost and service, right? And now the key, the carbon is the most important priority. So the trade-off, the balance are between cost, service time, and carbon. So one of the great things that Cooper can help us is in the network modeling, there is actually objective for lower the carbon emissions. So that can be the top priority that you wanted to solve through your network modeling, like in parallel to cost, to service. So you can just very straightforwardly put more weight into carbon when you're making your decisions. Like that can be a higher penalty cost when you have more carbon emissions. It's a very straightforward way to translate some sort of, you know, the carbon goal into some quantifiable goal into the modeling and data. Jonathan, I'm curious from a Microsoft strategic partnership perspective, how important is it for Microsoft to partner with companies that have that strong commitment to help facilitate being carbon neutral by 2030? Having a strong ESG initiative. It's critical. Microsoft for the most part is an outsourced supply chain in which we measure partners across the network. We have our partners run our distribution and centers. We have outsourced manufacturing. We have outsourced logistics. And it's important that we're working with them about what their plans are because they're just simply an extension of the Microsoft supply chain, right? They're not just companies we work with, they're companies we partner with to think about how can we change the future? What are the alternatives that we can do? How do we think about, you know, alternative fuels? How do we think about alternative shipping ways? How do we think about creating density in the network? So one of the biggest things when you really think about optimization is really around creating density. How do I create more with less and make sure I'm taking, you know, for every dollar spent, for every shipment made, I maximize it to its fullest, right? And leave no waste behind. That's the goal. And so, you know, partners challenging us is probably the most important piece because they're on the front line. They actually see our shipments. They see our loads. They see how, they see the work we're doing and how it's translating to their environment. And it's important that they give us that hard feedback back that allows us to know where we're not meeting the bottom. Got it. Cassie, you guys are giving a presentation in about a couple of hours. Talk to me about some of the things that the audience, like if you had to summarize the top three takeaways that the audience is going to learn from the talk, what would they be? I think the first is sustainability. So we want everybody to know that this is the key mission for Microsoft. That's the one of the priority for the next eight years for Microsoft to achieve. And the second is just like how Cooper can help us achieve that goal. And, you know, how do we leverage the applications, the tools, the cutting edge technologies for us to, you know, achieve a sweet balance between sustainability and technology. It's a pleasure. One of the greatest things about conferences like this, and Cooper is great with that customer centricity, is the opportunity to hear from the voice of the customer, what challenges you had, why you chose Cooper, how you resolved them, and that crystal ball that you talked about in terms of where we're going from here. I think that's, there's so much value, I'm sure, in what you're going to share today with the audience. Jonathan, last question for you, for other folks in any industry that are about to embark on or are in the midst of a supply chain, digital transformation, what's your advice, what recommendations would you give? You know, for me, it's really about two things. First and foremost is about creating data, focus on data, not an answer, not a conversation. What is the information that you require? And then the second piece about that is then how do you make sure you stitch it together? And how you create whether it's manufacturing data, whether it's purchase order data, whether it's sales order data, whether it's shipment data, whatever it is, making sure that you can stitch end to end together because each individual decision by itself may be right but could be wrong. Because ultimately it's about the decision for the whole, not the decision for the one. And then making sure you focus on the cultural change which is around, it's just not my area, it's just not my thing. It's about the end, it's about the planet, it's about Microsoft, it's about the customer, it's about the future. And making sure you're really, really focused on making that change, right? Not my change. Right. And Rob Bernstein even alluded to that a little bit this morning in his keynote talking about, you know, one of the things that Cooper breaks is silos. Yes. Organizations that, to your point, something might be really good for sales or operations but not good for marketing or logistics, for example. Need to be able to have that visibility across but also another thing that Cooper is famous for is collaboration. Correct. Being able to enable that collaboration across lines of business, across teams, across partners. And an important statement of that is, you know, when you think about change, think of it like a stream, right? Streams, they create pathways with persistence. Stay, when you believe in something and you're truly behind it, just stay the path, right? There'll be a time and a place because sometimes the decisions just aren't now but they will become. You know, there's a lot of things that, for example, myself and Cassie are constantly working on that might not be right now but they will be right in the future. And it takes sometimes just the right opportunity, the right situation, but the key is making sure you understand those things so when those opportunities present themselves, you can just step in. Yep. Because then another thing we've learned, I think in the last two years I'm losing count is it's not a matter of if but when. Correct. And you can apply that general statement to pretty much anything these days. Absolutely. Guys, thank you so much for joining me talking about Microsoft's transformation of the supply chain, the digital twin that you've created. Have a great time in your session. I'm sure folks are going to learn a lot from you. Thank you very much. Thank you so much. All right, my pleasure. For Jonathan Allen and Cassie Wong, I'm Lisa Martin. You're watching theCUBE's coverage of Coupa Inspire 2022 from Las Vegas. Stick around, be right back with my next guest.