Cloudleaf CEO On The Peggy Smedley Show: Common Supply Chain Challenges

Cloudleaf CEO, Mahesh Veerina discusses common challenges among supply chains of manufacturing, pharmaceutical, food & beverage, distribution as well heavy capital industries and how removing silos helps companies consolidate resources for greater efficiency. Listen here or read the interview below. [audio mp3=""][/audio] Peggy: My first guest today is a seasoned Silicon Valley entrepreneur, technology executive and investor, with more than twenty-five years of experience. His work has spanned across various technology sectors, including silicon networking, telecom, security, mobile, internet, cloud, analytics, you name it, he’s got it. So please welcome, Mahesh Veerina, he’s president and CEO of Cloudleaf. Mahesh: Hi Peggy, thank you for having me. Peggy: We are delighted to have you. You guys have this great IoT powered system of asset tracking and workflow solutions called sensor fabric. I’m pretty aware of it, but for those who might not know what Cloudleaf is, why don’t you help our listeners understand what you do for the industrial IoT space. Mahesh: Sure, so Cloudleaf is a three-year-old company based out of Silicon Valley. One of our core innovations is what you referred to, the sensor fabric. To explain simply, our sensors go on your assets. We collect data in real-time as these assets are moving through factories, warehouses, etc. The data goes to the cloud, we process it and present insights into your operations, essentially helping customers to know where their assets are in real-time and what condition they’re in. That’s the problem we’re solving. Peggy: So let’s talk about that, because it’s really important. One of the big things that’s happening in the IoT space right now, whether you are here in the States, or whether you’re overseas, is interoperability. Talking about connecting assets and information is critical. What are some of the challenges right now when we think about assets? You just talked about factories, warehouses, even smart cities. Why is interoperability so critical right now? Mahesh: Yes, absolutely, you touched on a lot of things. For example, at Cloudleaf, we are working across a variety of industry segments from pharmaceutical to industrial manufacturing like automotive and aerospace, all kinds of industrial manufacturing. The third sector is heavy capital projects, construction, oil & gas. You look at any one of these sectors, most of the data is trapped in silos, either in a warehouse management system or some ERP. Then you have to start collecting all this data and be able to process it. By the time you do, it’s already historical data and you don’t get the visibility you need. So interoperability is a key factor. How do you collect all this data in real-time, as things are happening, then capture data where your assets are, in what condition  and be able to feed it to the upstream system? That’s where the interoperability story comes in. Peggy: And that’s important because it’s not only in real-time, but in a cost effective manner that gives you that information. We’ve talked about how technology is advancing and how you build these smart networks. We now have sensors and gateways [and the cloud to make it operational]. Why is that important? Now people are saying, do we do it at the edge? What information do we put in the cloud? When we talk about what’s happening at utilities, we talk about construction companies, they are asking, what information do I share [since I am dealing with so many value chain partners]? It starts to get a little bit tricky in understanding what information to put out there. In manufacturing alone, we’ve been very siloed. There are a lot of decisions that have to be made, but again, what communicates to what to make these decisions? It gets really tricky. Mahesh: Sure, I think that’s where companies like ours are working towards simplifying this whole process. When you look at factory information, you have assets in your supply chain that are coming in from your suppliers.Then they get into the factory, there is even a production or some sort of a service on those assets, then out they go to distribution. Today if you look at how is this information collected, you primarily have barcode technology. There’s a human involved, you scan a barcode, data gets collected into some on-premise system and that’s it. Once it gets into the factory it disappears until the next human does a barcode scan and to replace the humans, people started investing in technologies like the RFID, which is a choke point. It will be electronically read by the reader when in proximity but loses coverage until the next scan or read. One of the things that’s helping us all is the convergence of sensors becoming so cheap and ubiquitous mobile communications. Then you have cloud coming at the right time and all the big data, the machine learning algorithms, large scale data processing tools available to everybody. All of this coming together is enabling a continuous, seamless, always on scanning network. What we do is you put a sensor on a pallet or anything that you wanna track and monitor. When it arrives at the load dock, there is no scan required, it is automatically picked up. Once the pallet moves through its process, whether it’s sitting in a freezer or a storage area, going through the machine line, ending up at finished goods storage, it is always being tracked seamlessly and continuously. All of this data is being streamed to and processed in the cloud in a safe and secure manner. And then the cloud has APIs to give it back to your ERP systems for further consumption. Now you can start imagining scenarios, whether it’s indoor, outdoor or in-transit, on a global basis and you can seamlessly do this. The other big thing is how do you do this at enterprise scale when load balancing and security is really important. Peggy: If I were listening to this, say I was with a manufacturing supply chain or a commercial construction project (there are a lot of parallels that exist between them). IoT technologies enable us to have this well-orchestrated interoperability that allows me to have better workflows, people and get actionable insights. Is this the key then to maybe fending off the bad guys who are trying to hack the information and at the same time? Also is all of this coming together at a time that’s right or we’re still not adopting it fast enough that we should? Mahesh: A lot of good points you touch on. The first one, there are a huge amount of parallels in construction and manufacturing. You look at any industry, there is always a supply chain. Stuff is coming in, we see this all the time in heavy construction, refineries and so on. Billions of dollars worth of material comes in and some of these big heavy construction projects take multiple years to finish. There was a Harvard case study done and most of these projects, upwards of a billion dollars, 90% of the time are delayed with cost overruns. So, how do we contain this? It goes back to bottom line and profitability. That begins with knowing the “WHERE”. If you have a large infrastructure project, understanding where your assets are, where your tools are, where your people are and being able to schedule them at the right place and right time.So there is a lot of work being done in this area. Companies like SPS, who provide software for managing heavy capital projects, need real-time data for scheduling and proper management of production control systems. Again, IoT is here to help track everything in real-time. There a lot of parallels between manufacturing, construction and pharma too. For example, if you get into pharma and food and beverage, not only tracking assets in real-time and where they are, monitoring conditions like temperature, humidity becomes very very important. If you are moving blood plasma around or any biologics, these are living, breathing organisms, they need to be below 40 degrees. If you’re at an ambient temperature, the material gets spoiled, so you need continuous monitoring of these. Why is this important to companies? Again, compliance is a big thing for FDA. Anytime companies have a temperature infraction, they are paying penalties which create huge losses to companies. We have heard from some companies that this could cost them as much as 10 million dollars per incident. And today there aren’t many tools. Surprisingly, you’ll see them using pencil and paper and Excel spreadsheets to track this. So that is where there is a huge opportunity. We’re still scratching the surface, it’s still early days but we are onto something that will transform supply chain and operations. Peggy: Talking about cost overruns, project delays and scheduling; when you mentioned pharma, getting the right people to the right place at the right time is critical. You’re talking not only about saving money, materials, time, but ultimately that can turn to saving lives? Mahesh: Absolutely. Worker safety is a huge issue. You’re in a large refinery, there are all these cranes flying around, they want to schedule the right people at the right place with the right tools. So we get asked quite a bit about worker safety related-issues and being able to put a badge or something on the worker. The machines are wired with sensors and are able to monitor. We have heard of a few use cases like this. One is in a mining scenario, where they are monitoring for dangerous gases. You don’t want people in the wrong places at the wrong time. So worker safety is a big thing and this technology is going to be widely applicable in mining, refinery and heavy construction, where operating tools can be dangerous. Peggy: When we talk about all this, looking forward, are we ever going to have this secure, open standards, ubiquitous connectivity that will allow for seamless interoperability, because I think, we’re not there yet. We need to have collaboration and sharing real-time information [across industries] to help our operators keep an eye on their entire ecosystems; in-house, in-transit, across the globe. Are we going to get there? The same thing with smart cities. There’s a lot that has to be happening. Is it still a dream? Are we still way to far out or are we gradually getting there, little by little? Mahesh: I think we’re making some rapid advances. This whole discussion about seamless connectivity. There are many standards evolving, a lot of companies that are in this space typically use standardized protocols that are widely used. For example, messaging, whether it’s MQTT or Kafka. That’s the way you communicate to the cloud securely. There is a lot that is happening at every level, how do you make interoperability work and then once the data arrives at the cloud, how do you connect it to other large entry systems, whether it’s SAP Leonardo, IBM Watson, etc. Again, there are standards for cloud to cloud APIs, mostly REST APIs and so on. So it’s definitely moving in that direction. As far as building security, again, there is a long ways to go. There is security at the device level, the sensor fabric, how are the sensors behaving? Who do they talk to? How can you protect from rogue devices entering the network? All that is important and then authentication of all these devices into the cloud. The data moving from the edge into the cloud is fairly secure, well-understood, again, there are many many parts to this security. Then the last big topic, which we haven’t touched on, is the data governance. Once you are collecting across all organizations, what happens to this data? Whose data is it? What’s the data privacy and governance issues? There are a lot of thorny issues as you go forward, but definitely the whole thing is moving really rapidly. Peggy: Do we have an issue when we talk about what’s happening now and what’s coming with GDPR? Is it changing the way enterprises think about IoT? Mahesh: I think there will be a whole lot of discussion, and for a while. That’s where standardization helps. This is a discussion on how this data is being viewed by different organizations––who owns it and who’s collecting it? I think this will be a thorny issue that goes beyond the technology. Peggy: Right now, companies look at IoT for safety, profitability, margin growth etc. Are your customers understanding the benefits of today vs. the challenges of tomorrow when they look at your technology vs. other technologies as you’re talking to clients? Mahesh: Absolutely. Just to give you some practical examples, we are working with a pharma company. Again, for them the key success factor is managing audit compliance and material losses. We are talking about really expensive raw materials. When an infraction happens, they lose millions of dollars. So there is an immediate need for them to have this kind of asset visibility, optimization and a tracking solution. Now they can proactively take care of infractions before they ever happen, since they have visibility into the location, temperature and movement/flow of data. Customers are seeing very quick ROI with our technology. That’s just one example in one industry...this is repeatable in industry after industry. Peggy: That’s important, because we didn’t see the adoption as fast as it should have been. Are the implementations starting to pick up momentum? Retail has always been faster to adopt these kind of technologies but are you seeing other industries gain momentum as well, like construction? Are customers more knowledgeable about technologies and how to use them or have they figured out how to get the ROI from using them? Are prices coming down? What is it? Is it a combination of things? Mahesh: Yes, you’re right, it’s a combination of things. The technology obviously was in a maturing cycle, so that took a little while and now you’re starting to see real traction. If you have an asset and a pallet moving around, there are a lot of operational issues you have to deal with. If you put a sensor on it and every few months you have to change the battery because the battery dies, the solution is not operationally viable to scale. So finally, when customers look at our technology, it’s a no brainer. They can see the ROI immediately. That’s one of the innovations of our company––a key breakthrough with alkaline low power engineering. Our sensors go on these assets and can last 3-5 years. Now you suddenly have longer operational viability at a price point which is much more reasonable. You can put a sensor for few bucks and be able to light up the entire operations. The data collection and insights from the data outweigh the investment. So, the first question you asked, we are definitely seeing a lot more momentum in projects from POCs to fast testing and then lighting up production scale deployments. We are also seeing interest in pressing ahead and expand to multiple sites and so on. It’s definitely happening. Peggy: What kind of things are we putting sensors on? Is it every asset? Are we tagging things from as little as the tools? Are we really seeing an ROI from that? Or are we going with much more bigger assets? What kind of assets do we think really need to be tagged? Mahesh: Excellent question. There are a wide variety of assets that can benefit from monitoring. For example, we are working with movable assets, that’s our sweet spot. These are pallets, tools, machines that are being moved around, that’s where we see a lot of traction, but again, from a predictive perspective, large static machinery is another opportunity where there might be multiple sensors attached to it. These movable assets or pallets can be carrying auto parts, vegetables, groceries, perishable goods, where customers want to track temperature and movement across their production sites, DC’s, warehouses to the final point. Then in construction, it’s not just logistics of moving material to the site and tracking it, but also monitoring large market dwelling unit, once you build them. One of our customers is essentially plugging in all kinds of seismic sensors, water and gas leak detection, environmental condition sensors and so on into the units––we track and monitor those sensors using our sensor data platform. And each site, literally there are hundreds of thousands of sensors that can go in. Then you have to ask, how do you manage this? Who is monitoring these, who is watching when a battery goes out in a sensor? How do you replace it? There is a facilities management application here. The larger scale version is what you are describing, the smart cities, where you can monitor parking meters to street lights, all kinds of equipment monitoring. That’s definitely happening too. Peggy: It’s interesting that you describe this, because as we think about bad actors, I don’t want to sound like a doomsayer, but what Experian is saying about an infrastructure attack, it becomes really important to be tracking and monitoring all these assets, especially in critical infrastructure. We need to start thinking in a whole different way than we have so far. Mahesh: Absolutely, especially when it comes to this public infrastructure, as you said. Whether it’s smart cities or large-scale power grids and water systems. It is very very important from a security perspective. Security is a never ending story, levels and levels of how do these devices authenticate themselves? How do you stop bad actors from getting in? That’s a big topic and has long ways to go, but in the private sector, things are moving very rapidly because digitization is at the forefront of pretty much every executive and board-level discussion and it’s become a huge competitive advantage for companies, just by knowing what’s happening in your operations in real-time. And to do that, you need to collect this kind of data. We have seen it in the online world for the last 15-20 years, but there is rarely any data tracking physical infrastructure and when there is, it is not continuous or gets siloed. That is what the sensor data platform is changing. * This is a transcript of the original recording of Mahesh's Interview with Peggy Smedley