Azure for Executives

The Current State and the Future of Manufacturing with Çağlayan Arkan

Episode Summary

Çağlayan Arkan, Microsoft’s Vice President and Global Sales Lead for the Manufacturing Industry at Microsoft, joins in this episode to talk about how Microsoft is engaging manufacturing and the supply chain. The discussion covers the current situation for manufacturers during in the current COVID-19 pandemic and how Microsoft is reaching out to customers and partners. 

Episode Notes

Çağlayan Arkan, Microsoft’s Vice President and Global Sales Lead for the Manufacturing Industry at Microsoft, joins in this episode to talk about how Microsoft is engaging manufacturing and the supply chain. The discussion covers the current situation for manufacturers during in the current COVID-19 pandemic and how Microsoft is reaching out to customers and partners. 

Further, Diego Tamburini, Principal Industry Lead in Azure for Manufacturing joins in to dive deeper on Microsoft’s partner ecosystem and how companies can join in that conversation.

Other topics covered include current and emerging trends and technology for the following pillars:

Show Links

[Transcript]

The Future Computed: AI in manufacturing

Manufacturing Industry site: COVID Webinar series links

Microsoft Industry Digital Forum: Exploring the current manufacturing environment in light of COVID-19

Microsoft Industry Digital Forum: Stories and Solutions Creating Manufacturing and Supply Chain Resiliency

Microsoft Industry Digital Forum: Re-FACTORY-ing Stories and Solutions Enabling Agile Production

Guests

Çağlayan Arkan

Vice President, Global Sales Lead, Manufacturing Industry at Microsoft

As Vice President, Manufacturing Industry at Microsoft, Çağlayan Arkan is responsible for managing the digital transformation for manufacturing companies across high-tech and electronics, industrial equipment, aerospace, and chemicals/agrochemicals globally, as well as guiding growth and compete strategies for Microsoft in these verticals worldwide.

Çağlayan is passionate about empowering customers to position themselves as first movers or fast followers in today’s disruptive era. By supporting organizations with new technology-led capabilities, strategies and insights that will fundamentally reinvent their products, services and business models, Çağlayan and his team are helping businesses drive sustained growth, agile innovation and operational excellence.

Prior to his current role, Çağlayan held several leadership roles at Microsoft and Siemens, successfully spearheading new strategic growth, market penetration and business development initiatives

Diego Tamburini

Principal Industry Lead - Azure for Manufacturing

Diego builds the best ecosystem of software partners developing manufacturing solutions on Azure and helping them be successful.

Episode Transcription

David Starr:

Welcome to the Azure for Industry Podcast. We're your hosts, David Starr and Paul Maher. In this podcast, you hear from thought leaders across various industries, discussing technology trends and innovation, sharing how Azure is helping transform business. You'll also hear directly from Microsoft thought leaders on how our products and services are meeting industry's continually-evolving needs.

I'd like to welcome Çağlayan Arkan to the show. Çağlayan is Vice President and Global Sales Lead for the Manufacturing Industry at Microsoft.

Çağlayan Arkan:

Yep.

David Starr:

As Vice president for the Microsoft Industry at Microsoft, Çağlayan is responsible for managing the digital transformation of manufacturing companies across multiple manufacturing verticals, as well as guiding growth and compete strategies for Microsoft in those verticals worldwide. Welcome to the show, sir.

Çağlayan Arkan:

Thank you. Delighted to be here.

David Starr:

And we also have with us today, Diego Tamburini, who's the Principal Industry Lead for Azure in Manufacturing. Diego focuses on delivering technical content to help manufacturing companies and software developers deliver their solutions, on Azure, at scale. He champions partners who deliver manufacturing solutions using Azure. Welcome to you Diego.

Diego Tamburini:

Thank you. And it's a pleasure to be here, everyone.

David Starr:

And, Çağlayan, I wonder if we could start by asking you to tell us just a little bit more about yourself and your team at Microsoft?

Çağlayan Arkan:

Yeah, happy to. So, again, my name is Çağlayan, and, on the one hand, I'm one of the industry leaders taking care of manufacturing globally. And on the other, I operate as anything manufacturing and supply chain in Microsoft across all of the verticals. And these are very interesting times for us, to be in the middle of this pandemic, as well as a major set of shifts, actually, anything manufacturing and supply chain. So this whole large scale transformation started a few years ago with this notion of Industry 4.0. But then in this environment we see acceleration of change, and lots of things being redefined. So it's a very, very interesting time to be doing what we're doing.

David Starr:

Indeed it is. And, with that, what are some of the primary issues related to COVID-19 that manufacturing companies are dealing with right now?

 

Çağlayan Arkan:

Well, at the highest level, I think it's fair to say that manufacturing is very severely impacted, particularly in discrete manufacturing verticals. Demand has virtually stopped, and also supply is very, very largely disrupted. We have seen some of the process manufacturing industries, maybe some of the pharmaceuticals and life sciences, some in food and beverage, with some increased demand, or at least continuation. But, by and large, a huge impact in terms of factory closures, furloughs, and layoffs, and also a major disruption in operations, because, by and large, manufacturers and supply chains were not prepared for this kind of disruption. So some, if not most, of them had started operating wind, did not have their people on the ground, on the shop floor, did not have visibility into their operations. I can go on and on. So across the board, pretty much everything is largely impacted.

David Starr:

You mentioned supply chain. Really quickly, I'll ask one more. And that, I assume, means that we've got some manufacturers out there holding loads of inventory, and others that can't get a hold of the inventory they need to manufacture their products. Is that what you mean there?

Çağlayan Arkan:

Well, partly. One observation we made was supply chains are very, very optimized. So we did not really have much of an excess inventory, much of any crisis preparation, any Plan B, if you will. And so it was very lean, and suddenly we did not have the raw materials. Obviously one notion, as it relates to supply chain, there's too much dependency on one source, perhaps one country, one may look at China here as a case in point. And so, going forward, we see many things around supply chains changing in a big way.

Paul Maher:

Thanks, Çağlayan. That's super, super insightful, and it's great to get grounded in what we're seeing in terms of the issues and the industry around COVID-19. I also know that you personally, and Microsoft, have really been mobilizing behind the scenes. And, perhaps, could you share a little bit more insights on how Microsoft has been participating within the manufacturing industry's response to COVID-19?

Çağlayan Arkan:

Absolutely. Happy to, Paul. So a couple of things. At the highest level, much like our entire set of customers, clients, large and small, we started immediately by offering remote work capabilities with Microsoft Office 365 and Teams, free-of-charge offers for six months, as well as entering support for quick deployment, Windows Virtual Desktop, et cetera. We then went to employee safety distancing with Health Bot trying to help the frontline workers in health, in terms of triaging, and filtering, and qualifying who receives a test, and who will not.

And we put our AI and intelligence to help with cyber attacks, which we've seen increasing numbers of those. So all of those, we quickly brought to bear. More manufacturing-specific, we partnered with some of our global partners, as well as some of the health institutions, and some global associations and large enterprises to make sure that low- and middle-income countries get what they need.

So we went through a number of sprints already, to build that global demand aggregation marketplace, so that we could help demand and supply meet, and then everybody get a fair share of what's needed. Obviously, in light of COVID, one of the facts that we were faced with, if you will, was that huge shortage of ventilators, and testing equipment, and over a hundred different items of personal protective equipment, from masks and the surgical masks, to gloves and face shields, and surgical gowns, and the list goes on and on. Those are literally over a hundred that are identified by The World Economic Forum. So we've done work relative to that demand aggregation marketplace, we've done work relative to, perhaps, encourage new designs, and create that pragmatic design marketplace. Maybe to activate also makers and 3D printers, et cetera.

And now we're working on supply chain response to provide visibility, resiliency, scenario planning, those kinds of urgent needs in supply chains to our customers. We're also working on enabling anything remote, if you will. Because as I said, manufacturers were mostly operating blindly, a huge, huge amount of them, and particularly with people not showing up in the shop floor, et cetera. And now, in a limited fashion, but we're seeing increased, accelerated investments into creating those digital trends of manufacturing operations within the four walls, so that people understand their assets and quality and performance metrics quickly, and be able to get predictions on them, act on them, et cetera. And going forward, what will shape as new normal, we see this is an accelerated need across a much broader set of customers, in terms of manufacturing.

And one very interesting consortium that we were engaged in, Paul, was in the UK. It's called VentilatorChallengeUK. It's a consortium of over 20 different companies from aerospace, to medical equipment manufacturers, to aviation companies, to logistics companies, et cetera, some of them, actually, also competitors. And so through our technology and partners, we were able to help them to increase ventilator manufacturing capacity from what they had at a 40, 50 a week, to 1500 a week, and be able to deliver those every week to NHS, the national health authority in the UK.

And it was fascinating to see how quickly our technology enabled training new employees, standing-up new lines, creating an end-to-end ERP, a new supply chain control tower and visibility, and bring our mixed-reality capabilities to life, in terms of having employees be able to manufacture things that they didn't know how to manufacture using technology. It was just fascinating to see what we were able to stand-up in a matter of weeks. And that is about saving lives. We're not confused about that too. But it showed the art of possible in manufacturing, and how Microsoft and Microsoft's partner ecosystem can quickly show up and stand-up new capacity.

Paul Maher:

Great. Thanks so much for sharing that. I'm just replaying back a little bit. I mean, I'm sure I speak for all of us on the podcast here today, and we wish everyone the best in these challenging times. And it's great listening here to see, even in a small way, the part that we at Microsoft have been able to play working with manufacturers. So thanks so much for sharing those insights. And, again, we wish everyone the best in these challenging times.

So with that said, switching gears a little bit, and we get to spend a lot of time together, and, of course, I know that you're thinking all the time around manufacturing, and strategy, and opportunity, and how we can bring together the opportunity around industry trends and technology to drive new innovation.

And so I thought it'd be interesting to ask you the question of, so if you think back to pre COVID-19, and as you've thought about manufacturing, and, really, industry and trends, what does that look like? But also, more importantly, with these changing times, of course, we've just had some of your perspectives on, perhaps, new trends, or acceleration of trends, that you've thought about before because of our changing times, if you look big picture at manufacturing, what's your vision of what's happening in manufacturing, and, of course, the opportunity for technology innovation in manufacturing?

Çağlayan Arkan:

No, absolutely. We see acceleration more than changes in approach, because we were already looking at technology drastically changing everything manufacturing and supply chain. But, obviously, we made adjustments in our portfolio. So we look at our customer conversations and our value-add, pulled across five different pillars. In short, those are related to workforce, our employees. Two, customer facing systems, anything marketing sales and service. Three, manufacturing, we call it Factory of the Future, or agile factories. Four, it's supply chains. And, five, it's about innovation.

In the COVID era, we didn't have much innovation in terms of, "How do you repeat that?" But you cannot start innovation cycles, so we'll quickly get back to it, because innovation is about growth, competition, it's market share, it's going to remain front and center, in terms of manufacturer's thinking. So a couple, maybe, soundbites across these five. Again, let's go back to the employees and the workforce.

We already had a huge skills gap that we identified in manufacturing, right? We're looking at automation changing the nature of the profile of the workforce, if you will, with repetitive and low value-add jobs going away, and a high value-add data jobs, digital jobs, remote jobs, and an existing workforce using more mixed reality, more communication collaboration tools. That is going to not only remain as a trend, but it's going to accelerate, because now manufacturers know they have to be able to operate remotely. They still have to be able to see their KPIs. They still have to be able to react to predictions, and take care of assets, and quality, et cetera. How about distancing and crisis response? All of that is going to be front and center in accelerated fashion.

I talked about customer systems. We reckon what COVID will accelerate is this notion of online sales and delivery. And so that is going to remain, that's going to be there big time. And we will be looking at accelerated e-commerce, and customer systems being connected to manufacturing and design, supply chains behaving differently, field service being redefined, et cetera. When it comes to Factory of the Future, or agile manufacturing, obviously the remote operations, remote everything, digital trends, those are going to be the name of the game. And then technology will increasingly, starting from Microsoft, I will say, is we'll increasingly move to actually enabling outcomes. It's not about technology. Technology is only a tool. But can we help you reduce scrap? Can we help you increase efficiency in your work processes? Can we help you improve your asset life cycle and asset health? So these are a the top-of-mind things that we'll be looking at. And, obviously, from robotic process automation, to low-code/no-code systems and platforms enabling first-line workers and others in a profound fashion, all of these are going to be the conversations.

Supply chains will move to a certain level of autonomous. We believe they'll become more integrated. Artificial intelligence will play a bigger role, in terms of starting from demand, and market signals, which is pretty much, it doesn't exist today, really. There are very, very few companies that have those signals, and then be able to match demand and supply in an intelligent fashion. Risk assessment, scenario planning, those are things that will become profoundly digitalized, and anything supply chain execution, really. And then, finally, high-performance computing and simulation, physics-based models, et cetera, will inform innovation in a big way. Old manufacturing paradigms of making many, many parts, and then assembling them and welding them, et cetera, now, 3D printing, AI-led generative design fundamentally changes all of those. And so innovation cycles have to be revisited.

So this is our portfolio. This is our customer conversations. And from a platform standpoint, we are very, very proud of it, very excited, in terms of what we have brought together, uniquely end-to-end. And then we're using open manufacturing platform, and our partnerships with OPC foundation, as relates to OPCUA, and across our entire partner ecosystem. The elevated platform and accelerated cycles in terms of time-to-value, that is not only strong, but is also very unique in our belief.

Paul Maher:

Fantastic. Thanks so much. And, Diego, I mean, I'll just pass it over to you, as well. I know we're hearing here a lot about the trends, and our customers. Any insights that you could add, Diego, from our partner ecosystem?

Diego Tamburini:

Paul, of course. We enable the scenarios that Çağlayan just described, mainly through partners, partners as independent software vendors, and systems integrators, who build their solutions on our platform, and, most notably, Azure. So we are seeing in my team that we enable ISVs to get into Azure and the marketplace. What we're seeing, interestingly enough, is that they are getting a spike in demand for some applications, or some scenarios, that have become more urgent with the COVID-19 crisis. So some of which Çağlayan mentioned, everything remote, any solution that allows people to look at the KPIs, OEE, and performance of their factories remotely, they are getting a lot of demand.

Anything that has to do with workers' connectivity, and workers' retraining, particularly for those factories where they are doing the repurposing, or refactoring, they need to train their workforce very fast. I mean, these were workers that were building cars, and now they're building ventilators. So those solutions have gotten an incredible spike in demand. So we are scrambling to help them get on the platform, and partner with us.

Paul Maher:

Thanks, Diego. And that makes a lot of sense. I mean, just playing back what you've said is that we're seeing new innovation that's resulting from the current situation. So Çağlayan was mentioning earlier on that, I think, around just generally the skills shortage in manufacturing. But now pivoting to driving new innovation, and moving away from core competencies. Of course, training is crucial.

So it's kind of interesting to hear that. And I liked I'm hearing more and more about this remote everything, and of course, again, in our changing times, accessibility and remote working as is key. And I love that we're seeing from the partner ecosystem, and the ability to enable that remote working, whether it's standing-up work stations with pre-populated tooling, and so on. And so it's great to hear that.

And for me, I think it's great that we as Microsoft have been able to be part of the conversation and provide our insights, but it's also great to see the industry itself really mobilizing together for a common cause, and driving new innovation. Anyway, just really, really super interesting to hear. Thanks both.

David Starr:

And now let's take a moment out to listen to this very important message.

Female Voiceover:

Did you know the Microsoft Commercial Marketplace allows you to find and purchase leading Microsoft certified solutions for Microsoft partners? The Microsoft Commercial Marketplace includes the Microsoft AppSource, and Azure Marketplace. Each storefront serves unique customer requirements and different target audiences. So publishers can ensure solutions are available to the right customers.

For applications that integrate with Microsoft 365 products, visit Appsource.microsoft.com. Get solutions tailored to your industry that work with the products you already use. For B2B Azure-based solutions, visit Azuremarketplace.microsoft.com. Here you can discover, try, and deploy the Cloud software solutions you want.

David Starr:

So Çağlayan, we've talked a lot about the very valuable relationship that we have with our partners. How should software vendors best position themselves to partner with Microsoft and jointly go to market?

 

Çağlayan Arkan:

Yeah, that's a very, very good question. As Diego suggested, we're seeing an accelerated impact, market impact, as our partners become more targeted relative to the outcomes they're driving, and more efficient in terms of the time-to-value to those outcomes. The whole partner ecosystem is just adding a ton of value. We have a number of programs, but I will point out to, perhaps, the Microsoft Commercial Marketplace. That is where I'd like to see all our partners transacting on that marketplace. Obviously, it starts with us showing up. I would encourage our partners to become wholesale-ready with their assets, and solutions, and IP.

And then, do work with us in terms of the go-to-market plan and execution, when it comes to which target geographies, in terms of which verticals, and which workloads, and which value pockets to drive. All of that requires, obviously, diligent planning, and rigorous execution, which we're here to help with. We're very, very excited. We're seeing a huge market opportunity for our partner ecosystem. So we're excited to engage.

David Starr:

For those who may not know you mentioned the term Co-sell Ready. What does that mean for us?

Çağlayan Arkan:

Microsoft has this powerful program for partners who are betting on Microsoft as a platform, and as a partnership. We have go-to-market thinking and assets, as well as wholesale. Again, roles identified, and an execution in place. So we go-to-market together with our partners. This is all about, again, I'll go back to time-to-value, and our field is actually at a very, very good place to embrace our partners, and sell with them in their respective geographies. And, as we speak, we continue to make amazing progress in terms of making that a friction-free process for our field sellers and our partners. And so it's exciting to see the pipeline, and the market impact.

Paul Maher:

Fantastic. So, I mean, the goal here of the podcast today is, of course, this is just the start of the conversation. I'd love to be able to allow our listeners to hear how they can continue the conversation moving forward. So, of course, in the show notes, you'll see, we'll share Çağlayan's and Diego's links on how to connect with them on social media. But I'll ask the questions to both Çağlayan, followed by Diego: So any closing remarks, in terms of for all listeners here today, how they can continue to learn more about the topics you've talked about today? So let's start with Çağlayan. Do you want to go first? And then we'll go with Diego.

Çağlayan Arkan:

Yeah, absolutely. Thank you. I'll go back to the market is at the edge. It's like a tipping point, and we're almost there. We're going to see accelerated investment in everything manufacturing, and supply chain, and in the workforce in a profound way. We are ready. We believe so is our partner ecosystem. So I'll say call to action is, let's get together, let's have the right conversations, and let's hit the market together.

Paul Maher:

Fantastic. Diego, over to you.

Diego Tamburini:

Yes. I will say that, for any of your listeners, that particularly from software vendors, independent software vendors, that want to partner with Microsoft to bring innovation to manufacturing together, feel free to contact me or my team. And we will help you with the first step to partner with Microsoft, which is to be on our platform, and also on our commercial marketplace platform, so you can go-to-market and sell your solutions directly with us. So we're here to help.

Paul Maher:

Thank you, Diego. And as a reminder, you will see all those ability to reach out to Diego and Çağlayan in the show notes. So, David, back to you.

David Starr:

I'll mention real quick before we close out that, if you want to learn more and aren't looking at the show notes, it's easy enough to go to microsoft.com/manufacturing, where you can learn a lot more about Microsoft's manufacturing initiatives.

And I want to thank both of our guests for appearing on the show today. Diego and Çağlayan, thank you so much for being on the show. It's been an absolute pleasure.

Çağlayan Arkan:

My pleasure. Thank you.

Diego Tamburini:

My pleasure.

David Starr:

Thank you for joining us for this episode of the Azure for Industry Podcast, the show that explores how industry experts are transforming our world with Azure. For show topic recommendations, or other feedback, reach out to us at industrypodcast@microsoft.com.