Hello, everybody.
This week's guest of Vispera re:retail program,
which we developed to address the changes in the fast-moving consumer
and retail industries is Al Safi Danone Chairman Tolga Sezer.
Welcome, Mr. Tolga.
Thank you, Mr. Gökhan.
In the process of digital transformation,
there have been issues on people's agenda for a long time.
Now everyone is going through an accelerated period due to pandemic.
Can you share with us the decisive factors
for your company's success in this period?
Now, I'd like to talk about this change first.
Yes, of course.
We're going through an incredible period.
We talked a little bit before the recording started.
I've been managing 14 countries as Dubai centered for three months.
Although the company headquarters is Riyadh.
I have three screens in front of me on a big table,
and I feel a little bit like a "trader,"
and I'm having very busy shifts.
It taught me a lot.
In fact, the most important impact of this experience is
that it taught something to us all.
The first thing, you know,
particularly multinational companies,
large companies, they always do a risk study,
they make a risk map.
I don't know if you ask in your conversations:
"Was the pandemic on anyone's risk map?"
Well, it's a situation that most people don't expect,
a little bit like a black swan,
that's generally possible in finance systems,
but nobody thinks of it.
I know these risk maps as "real" very well, the way they work.
I don't think any company sees this
in the 10 most probable and influential risks.
Whoever says this, I'm sorry but
nobody has that much foresight.
We were all caught off guard.
We also talked about this;
we didn't even foresee it when it was coming from east side.
It was an incident in China, in a certain part of China.
And no one thought that it would affect the world
and the way we do business, the way we live.
Now, about health...
Actually, Mr. Tolga, I can say this:
Now, when the first virus broke out in China, in Turkey,
we thought, "Well, it probably won't come here."
Because there have been
similar scenarios before.
It was not something that
anyone thought, personally or institutionally,
that it would turn into such a big pandemic, an epidemic disease.
In short, the pandemic is real and it has an enormous effect.
And we're probably going to talk about the "new normal".
It's probably going to be very decisive on "new normal."
Second point is health.
Health is so important now, in everything.
We'll talk about the effects of this.
Third, it has had this effect on all of us:
we went into our shells.
We've been home for three months, we've been working from homes,
and I guess that's also how you work.
Exactly, we've been home since March 13, working from home.
Yes. I've been home since March 10,
and it has had this shell effect.
It's some kind of trauma. And we'll see the impact in the future.
We see that authority is being redefined.
There's a very serious debate right now all over the world.
There is a redefinition of authority
and we will see the effects of this.
And of course, the most important thing is
the digital transformation that concerns both you and us.
I've spent a lot of time working,
of course, there's such a big operation, and we've got 3,500 people working,
and we're going to over 30,000 markets in 14 points.
In Riyadh, in the middle of the desert,
we have 55,000 Holstein cows.
We are also responsible for them. We take care of them.
We have a mega production facility and 27 lines on the same campus.
It's a big operation. And of course, it's very complicated.
Of course, managing this from a distance in this way has been...
-...a very interesting experience. - Yes.
Now, while I was doing this, I followed as much as I could.
As many of the world's leading management consultants,
I'm guessing they had many spare times.
There were great and interesting programs.
Now, the most important COVID effect
that I've ascertained from these is
that COVID doesn't actually create new trends.
COVID accelerates some existing trends.
This acceleration effect is very interesting.
We were talking about digital.
Digital was, of course, on our agenda.
We did some simulations with you,
we did some tests, we already started working.
But right now, as a result of an incredible acceleration effect,
I think digital transformation
has become a requirement
For all organizations.
Now, it has a very important place,
of course,
on our agenda.
So, we say digital transformation is essential.
And we have to put a lot of effort into it.
Because for the company's success, there are many changes,
many innovations.
For instance, you have to look at your organization.
Old silo-style organizations will no longer be effective
in "new normal."
Therefore, the organization needs to change.
It is important that a much more horizontal,
much more efficient organization emerges.
Why? Because you have to make quick decisions.
The continuous crisis management
in the last three months showed us this.
If you cannot make a quick decision,
it is very difficult to manage your business.
You will also find information faster
to make quick decisions.
You have to process information very quickly
and you will come to a certain conclusion, you will make a decision.
It's hard if you don't have that ability.
Absolutely.
In fact, all of the things that you're saying now,
all of the concepts point to a situation that I've noticed
during counseling that I've done over the years.
For instance, we've always told our customers, our stakeholders,
that digital conversion is very important.
And we were always between what is digitization
and what is digital transformation?
Digitalization is the opening of an application,
which can be a traditional application,
to users on a digital front face, in digital environments.
Digital transformation, on the other hand,
is the reconstruction of everything with its organization
and operation model and designing it in a truly digital way.
These two are different.
There is a difference between digitalization
and digital transformation.
And that was one of the things that we've been talking about for many years,
as I said, with our stakeholders, with our customers.
On top of that, digitalization is not enough,
digital transformation is required,
and you have to do it quickly.
Whatever you do, you no longer have time
to do a two-year digital transformation project.
You have to design this and launch it within a few months,
and then improve it in an iterative way.
The concept of "new normal" entered our lives
through the COVID-19 process.
What do you think "new normal" is?
What are your predictions for the technologies that will support your
business processes during this period?
Mr. Gökhan, that's very accurate.
I don't think many companies have fully understood the digital transformation.
Right.
Therefore, it is essential to make a great effort.
Now, our chance was this; I'm already here at Al Safi Danone
to manage transformation and change.
So before the crisis,
we had already started a transformation and change program.
And instead, I created a new leadership team, and of course
we had a new vision, new goals, a roadmap, with this leadership team.
In fact, we shared this new roadmap
and this new growth map
with the whole organization just before the crisis.
However, before the crisis, it was perhaps 50-60 percent of the organization
that truly and wholeheartedly believed
in this change and transformation.
After the COVID, three months later,
I'm guessing everybody believes it.
Right.
So again, we've had a serious acceleration effect.
What's "new normal" gonna be like?
First of all, business and office life will not continue as we know it.
That's clear.
Of course, not in the field, not in the "frontline,"
but in the form of "back Office," headquarters and so on,
a number of support departments worked in a "remote" format
for three months.
And I think that's generally efficient.
We handled it well.
We had a certain infrastructure, we used it well.
And we're thinking about going on like this.
Of course, we're not going to do it all the way from a distance,
we're going to do it as a hybrid,
but I certainly don't see it very efficient for companies
to go back to the office and continue working as before.
Considering the new precautions,
we need maybe three times the office space
because of these new regulations, social distance and so on.
It's clearly not feasible.
So office life needs to change,
and I like the definition here; "hybrid".
It's all remote management, not remotely working.
Not exactly office life like old times.
But I think there will be an optimum point of this.
And of course infrastructure is very important here.
We use Microsoft Teams,
and we don’t even use 10 percent of its talent.
We discovered that the system is much more talented.
This period of crisis taught us this.
The channels will be completely different.
I mean, sales channels are an e-commerce.
Again, we're all talking, e-commerce has been on our agenda.
But let's face it, it wasn't our priority.
Now there's been such a growth in e-commerce
that,
in chain stores, which are our clients,
we're working with them,
even on the e-commerce platforms of chain stores,
our "listing" wasn't done,
our prices were false, our product visuals were out of date.
We faced such a fact.
So again, in a very accelerated effort,
these were corrected, the lists were completed.
But other than that, it's only a certain part of the e-commerce.
Other aggregators,
different models, new systems,
maybe direct consumer access;
this channel is now a very different level.
And again, it requires
a serious focus.
So we need to look at new business models.
So what we've done is that the group that we're in contact with has some
venture capital companies,
where we're thinking of building an incubator with them.
Because again, I think it's going to be a very important part of change.
I think it's very unlikely that any of these large companies, the big ones,
will be able to actually run these exchange projects individually.
So we want to build this structure and follow not a few,
but more of the projects.
This is going to be an interesting opening for us.
Definitely.
Life on the field will change. Why?
We talked a little bit about this with you.
Everyone on the field is waiting for maximum efficiency.
The consumer wants to go in and out very quickly.
Of course, there's a lot of pressure that comes from this.
Why?
If you don’t have the merchandising exhibits in the right place,
then the consumer is unlikely to choose you anymore.
We also expect our field team
to work highly
and efficiently at the minimum time.
Because there's a risk factor again.
Especially in massive operations like ours,
if you think about a Saudi Arabian market,
we have over 550 roots.
Yes, it's a big country.
Of course, we have over 550 roots.
These are all cold-distribution,
milk and dairy products are hard,
very fast, the fastest transformation of the industry.
-And here... -It's very critical for you
because you have a shelf life product
that requires you to have a plan
to visit the most frequently sold points at root first.
And you have to do this dynamically, this optimization,
this planning in the current conditions.
So that the maximum product should be kept in the display.
Maximum sales before the shelf life is completed.
-It is vital for us. -Yes.
It is vital for us.
For instance, before we started this transformation program,
we saw that the return rates were very high.
It was one of the serious problems of the company,
and we had problems in many fields.
But the return and the natural damage
that came out of this was extremely high.
And that's all about how you run the operation in the field.
Therefore, I think
it is a very important focus area.
And here, of course, we need to use all kinds and efficient of technology.
It's true.
We saw the benefits of this very clearly in our simulation with you.
Maybe it wasn't much up there before during the moment of importance,
but it's become essential now.
Of course reporting and data, we've talked about this.
Now, there is also some in Turkey, too, although Turkey is ahead,
there is a lot of manual reporting in the Middle East.
Even though we have a system,
reporting is still more manual,
there are still many reports that are being done through Excel.
These need to change.
You can no longer expect someone
to prepare an Excel report for you to get to "data" quickly,
to get to information quickly,
to process fast, and to make decisions.
Therefore, I think that system reports should become
much more "effective".
Absolutely. I'm going to say a few things now.
One of them is, of course, everyone is trying to be an "insight driven company".
Which is very important to be managing the company with the data,
and it is a point that everyone wants to go to.
Now when I think about the solutions Vispera provides,
what do you do, in fact,
you take a picture of the shelf and get some information about it.
Is the product visible, on the shelf, compatible with the planogram,
price label on the same place as the product, correct?
You can control all this. That's a good thing.
It actually dramatically increases your time in the field,
the time and efficiency of your field team.
Of course, when you combine this with your sales data
or combine it with other data sets,
you have the opportunity to do a lot of analysis.
That's an important point.
The technologies we've developed are often around
issues like "intelligence"
and "computer vision."
I would like to ask a question in this context.
Considering that there are issues such as "artificial intelligence",
"artificial vision", "internet of things" and "blockchain" in the new era,
what are the opportunities these new generation technologies
can provide to your industry and you?
Now, the most important opportunity is
again, for me, the merchandising and display is vital.
In such a short period of time, it is very important for me to be in the right place
with the right product in the right time.
First and foremost,
this system will affect our efficiency at this point.
And again, this was an issue of efficiency,
and it's become a vital issue right now.
At the same time, the consumer wants to spend minimum time,
and my sales team still needs to spend minimum time.
He's got to keep an eye on hygiene and sanitation there.
So in this new normal, again,
I think this tool will be vital to us.
Second,
now, considering this interesting process,
if you remember, consumers first ran to chain stores.
Of course, there was a rush of shopping.
And long shelf-life products were bought.
There was an explosion in the first supermarkets.
E-commerce failed.
E-commerce could not deliver orders.
So here, -very famous but let's not give names-
the big chain stores have gone over two weeks.
Think about it, you order from e-commerce,
and its estimated delivery is two weeks later.
That's no good.
Orders were shipped wrong. They had big problems.
Of course, they had inventory problems.
For instance, you order it,
as if it is in the stock, but the product does not arrive.
Why?
In fact, there may be a result here,
such as the inability to monitor stock and track inventory instantly.
Yes, well, it turns out there's a serious systemic weakness.
Now, that was the beginning of the process.
And then, of course, we got to an interesting point.
This time, he discovered the proximity channel,
the curfews, the restrictions
and so on, and suddenly they discovered the grocery store in their neighborhoods.
-Discovered it again. -Discovered it again.
So, of course,
the merchandising and availability at those points
also became very important.
Therefore, if we look at this balance,
the effective use of these tools will be crucial for availability
and merchandising displays
at these points.
We are going to many points in terms of the structure of the business.
And if we do not have a solution at these points,
it will not be possible to use these points effectively.
Again, an essential situation.
Right.
So again, it was an interesting project.
But I didn't, for example,
get feedback from my team that this was essential
to our operation,
and it was a very important solution.
But right now, I assure you,
the team is fiercely demanding this solution.
Because first of all, again,
we have a certain workforce, a certain team.
We have, of course, done a lot of work,
to keep the workforce, to keep an eye on it,
and to make sure that they do business in the framework
of the new hygiene and safety procedures.
So these kinds of solutions,
they're going to be very helpful to us.
There was those display staff in the old times...
That man comes in, goes to the shelves, and touches everything.
So for example, in "new normal," that also became very limited.
Of course.
Notice that many markets,
many chains, are trying to minimize this.
Yes, that's right.
Mr. Tolga, thank you very much
for your time at re:retail.
So, as you mentioned,
the business community is having a very serious transformation,
which we've all seen together.
So, thank you again.
Thank you, Mr. Gökhan.
These subjects are interesting, of course, multi-dimensional subjects,
they have very interesting explanations.
I repeat, again, an important teaching:
Wherever we are, in whatever position we are,
no matter how old we are, we need to learn all the time.
And I think this process has shown us the importance again,
and that's why I'm interested in these new technology openings
and solutions that I find very important
and I'm personally interested in.
So I'd like to see the cooperation with you
develop and go to other places.
Great, thank you again.
Thank you.
Dear viewers,
we'll be here again next week with a different guest.
But during that time, you can always reach us
on our LinkedIn account.
Until the next episode, goodbye.
Take care of yourself and stay healthy.
See you.