Operations Consulting from Shop Floor to Boardroom with Gabriel Rodrigues

Gabriel Alves Rodrigues 00:38

Thank you very much, Justin. It's a pleasure to be joining you in this conversation. I'm sure I'm going to be learning a lot here today and hope I can share some interesting insights to you and your audience so we can make operations more efficient and competitive.

Gabriel Alves Rodrigues 01:06

Wow. Now, if I can start with the weather, that would be the easiest one, right? Now, Chicago is amazing. I'm originally from Brazil, as you mentioned. Brazil is, I think there are several similarities between Brazil and the US, but several differences, huge differences, especially when you think about the infrastructure.

Gabriel Alves Rodrigues 01:34

When you think about the regulations around operations and even around labor, around taxes, I think there are some huge differences that...

Gabriel Alves Rodrigues 01:54

I wouldn't say less, I would say different. I would say very different from what we have here, which makes a very complex environment to operate in Brazil from that standpoint. But if I translate that to the US, the challenges are a bit different. The challenges here are more related to labor, to... integration and how you connect in a country with the size of the US, right? How we make efficient supply chains in these environments where we have a very, I mean, when you look around the population and the consumer market that our companies, the companies that we work with try to serve, in the US you have a much more You have a huge consumer market in the West Coast, a huge consumer market in the East Coast. Brazil is much more concentrated, so which poses different challenges related to how you organize your network, how you optimize your locations, how you optimize your cost than here. So it's different challenges, but...

Gabriel Alves Rodrigues 03:17

Yeah, yeah, yeah, yeah, yeah. So those differences, I think, are super interesting to learn and you compare and contrast the two countries. But there are several things that we realized that we learned operating in Brazil for several decades that we could apply here, especially when it comes to efficiency, to the details of extracting the value, the maximum value from the assets that you have. which I think from the context that we had in the US for the last couple of years with higher interest rates, high inflation, that became very important for organizations so they could maximize their return on investment.

Gabriel Alves Rodrigues 04:07

Yep. Yeah, yeah. Yeah, I've been with the company for about 16 years. And I'm an industrial engineer. since I graduated, I just started with the company after a period of working with Unilever. And inside Falcone, we've been serving, 95 % of my time at the company, I've been serving manufacturing, logistics operations, trying to drive efficiency. from different segments, mean, all the way from aviation, passing through mining, steel, consumer goods, also pulp and paper, not only in Brazil, but also Europe, Mexico, in the US, Canada.

Gabriel Alves Rodrigues 05:13

So it's been a fun journey so far. So I started with as a business analyst and working directly with the shop floor with some of the supervisors, managers, and became a partner of the company a couple of years ago. For eight years ago, I moved to the US as part of our ambition to establish a more structured operation here.

Gabriel Alves Rodrigues 05:43

And it's been an amazing journey so far.

Gabriel Alves Rodrigues 05:57

So the main locations that I've been going to, Texas, I mean, in the US, most of the places where we've seen a boom in industrial demand like Texas, if you think about the whole Midwest as well has been strengthening the manufacturing arm they have. but also a lot in Mexico, a bit in Canada recently, and a lot in Europe, countries like the Netherlands, Germany, those have been some countries we've been working with recently with a special focus in manufacturing and logistics.

Gabriel Alves Rodrigues 07:02

Yeah, a lot a lot a lot Yeah. Exactly, because a lot of these, especially the global companies, a lot of their, as they are, we do a lot of work focused on implementation of strategies. So even though those strategies might be defined globally, sometimes they require local support to push the implementation of their strategies. So that's why also it drives a lot of our work around the globe.

Gabriel Alves Rodrigues 07:43

Yeah. So that is a great point, because especially when you think about operations, which is where we focus nowadays, a lot of these strategies, they revolve around a pretty common group of strategies. I think it's always around revisiting your footprint in your network design, it's around driving efficiencies within the walls of your operation. Is it around simplifying SKU portfolios or simplifying structures, moving capabilities from central teams to local teams or all the way around? So these strategies, they revolve always around or working with different suppliers, right? They revolve around these elements. especially nowadays, what we have seen, the main priorities for companies that we have been trying, helping to push and implement are around simplification of their portfolio of products so they can make sure that they're working on their more profitable products, simplifying the value chain so they reduce their risk. Like for example, as you go through your portfolio, how you make sure that we are

Gabriel Alves Rodrigues 09:31

removing from there the ones that are lower margin, high complexity to your operation, but at the same time not affecting your ability to sell because sometimes a lot of the sale of one product is conditioned or connected to a sale of another product. So that is one of the big elements. But the main one that we have been working on is helping companies to drive

Gabriel Alves Rodrigues 09:59

operational excellence within the four walls of their operations. And the reason for that in our perspective is because with the challenges with labor market recently, the challenges with raw materials, higher prices of energies, companies started to focus on what can I do to offset that so I don't pass that price or the cost increase to my clients. Right. So a lot of

Gabriel Alves Rodrigues 10:29

labor, productivity optimization, and not even to reduce the number of people that we have, but also, but to how can I operate with this labor that I have available today because the location that I'm aware today, I cannot hire anymore, right? So you do risk your operation with that. But also, how can I reduce raw material losses? How can I...

Gabriel Alves Rodrigues 10:57

reduce quality losses. And even thinking about the fixed cost around that location, their operation, how can I optimize that so when I have this volatility in my demand, I don't get so bitten by the fixed side of my cost structure. So those has been the main strategy that we've been working with companies across the globe to push.

Gabriel Alves Rodrigues 11:27

How it ends. I'm sorry. Yeah. Yeah. And I think that the way that we like to operate is we kind of become, it's very difficult for anyone in any organization to push a strategy. And at the same time, be running the business, right? it's just like how, because we're trying to, it's literally, we are trying to change the wheel of your car, but the car is still running, right? So how you do that? Yeah, right? So what we normally try to do is to come as an additional muscle that can help companies drive that strategy, that implementation.

Gabriel Alves Rodrigues 12:34

at the same time that they keep the business running, while we help them build that new capability so we can go away and they can sustain the performance. So we start to become an integrated part of the company's team, our client's team for a while. And then we start to help them shift the processes, shift the structure, train the team.

Gabriel Alves Rodrigues 13:04

and want that is more stable and they can run that by themselves, we start seeing the results moving. That's when our team pulled off and let them keep the show.

Gabriel Alves Rodrigues 14:45

Sure. So I think we have a clear understanding that the best way to collaborate with any other client is to have clarity of what the issue is and which role we are going to play, which role they are going to play. So we invest some time to build that clarity.

Gabriel Alves Rodrigues 15:12

together with them. And sometimes the client already shows up with an idea of what the problem is, what they're trying to solve for. But we also need to do a sanity check of that because sometimes that direction is not correct. Just as you described, just like a doctor, right? Someone likes to self prescribe, right? We need to do some sanity checks first. what exactly, right?

Gabriel Alves Rodrigues 15:41

So what we normally do, there is a couple of days that we engage with a client, not under any type of contract, just under an NDA so we can exchange information safely, that we would normally interview a few people to understand the different perspectives, what they are trying to accomplish, and also do some financial analysis, but also some process analysis. looking at some process metrics. Let's be more concrete for this. recent conversation that we had, someone showed up to us and said, listen, guys, I'm looking for someone to help me with my productivity in my warehouse. So first thing that we start to do is, OK, let me know. What is your productivity today? What type of operation do you have? Why do you think this is a problem? What's going on? So we had a few conversations. We visited one of the warehouses, look at the process, look at the operation. And we even look at, what are the initiatives that you guys are already doing? Because probably there is someone doing something here, right? So we look at this and then you say, okay,

Gabriel Alves Rodrigues 17:05

Guys, I think there is a lot of things here that you guys have on the plate that seems to be targeting the right thing. for us to get to that conclusion, we would, after understanding their operation, would compare with some benchmarks, we would compare some internal references that we have. So we would provide them a full potential of,

Gabriel Alves Rodrigues 17:30

Yeah. Yeah, right. Yeah. So we would come and say, okay, today you are at, I don't know, 200 pallets per hour. You could, for your type of operation, you could get probably to, I don't know, 350, but those are some of the elements that we would need to work on. And this is the element that you guys are already working on. So you could either stick to what you are doing, get some improvement, and that is a good path. Or we could also come on board and help you guys getting beyond this with some additional resources that we can bring and pull together for you. So that's when the engagement would actually start with a target, a clear return on investment. So a common objective. we become almost like a joint team to work towards that objective.

Gabriel Alves Rodrigues 18:58

Thank you.

Gabriel Alves Rodrigues 19:24

But I it's amazing what you guys are doing and what I think we like to do as well. If you think about operations as a system, Every component on that system has a specific function that feeds each other, right? So the more we learn about that is just as you described, just like the body and the physician, right? before you become specialized in certain things, it is good to have a good understanding of the whole system. So then you can start to better trace and connect each thing. Of course, buildings played a big role, for example, when you think about productivity, when you think about flexibility in the operation, and that is on top of mind of...

Gabriel Alves Rodrigues 20:20

the CEOs, the heads of logistics, heads of supply chain. So I think the more you can bring these elements to the discussion, that's, think, where you start seeing the value of the partnerships.

Gabriel Alves Rodrigues 21:08

It changes a lot, especially when you think about the results. For us, the way that we normally operate, I think it is actually good. It is interesting because every time that we come in, we come with the ambition to generate results at a fast pace. I think What normally changes from a private equity perspective to a public trade company or family-owned company is the speed and level of intensity that is behind that ambition. And that's for me, think what needs to be balanced. And we need to be able to balance that as well. Because depending on the speed that you're trying to push to some results that can push you towards some decisions that can jeopardize the meat to long term of that operation. So I think that that's something that we need to be, we try to be very cautious about and even push back on that because that is, that is, think, part of our role. But I think that is the main difference. But other than that, I would actually incentivize

Gabriel Alves Rodrigues 22:33

I think the private equity mindset on the results, on the cash flow generation, bidder improvement, bidder margin improvement, I think that is actually a very, having that focus, I think it is good. I think the point is how fast and what do do with that, right? Yeah, right? But also what do you do with that, right? mean, okay, because if I am...

Gabriel Alves Rodrigues 23:01

If I am a family-owned company, I think being ambitious on improving your cash flow, improving your margins, I think that is great because then you can do whatever you want with that cash flow. And you can always be, you can become more competitive, can become a bigger company, whatever you want. You can even distribute more to your own employees, whatever you want. So I think it's a value creation element.

Gabriel Alves Rodrigues 23:31

that at least keeps you in the edge of competitiveness in whatever you want to do with that competitiveness then becomes your decision. I would actually, and that's what we thought.

Gabriel Alves Rodrigues 23:44

And so I would incentivize everyone to do that because that's the type of mindset that we need to try to bring is let's focus on the results, on the problems that we need to solve. So that is what I would recommend.

Gabriel Alves Rodrigues 24:05

Yeah, right. Because in the end, matters to every business, I need to generate enough profit that I can reinvest in the business or whatever I want to do so I can still be competitive and advance my competitiveness or if I want an exit, whatever. But it's always positive to be more profitable, right? Because then you can decide whatever you want to do.

Gabriel Alves Rodrigues 24:34

with that profit. Again, considering that you are not jeopardizing the need to long-term elements of your operation.

Gabriel Alves Rodrigues 25:01

Thank

Gabriel Alves Rodrigues 25:32

So a lot of... And that's a fun part of our... a lot. a lot. I cannot count how many hours we spent in the shop floor with the hard hats. I mean, it's funny for us because we normally even start dressing the same garment as the operators, the same as the supervisors.

Gabriel Alves Rodrigues 26:01

as we are because yeah, because we want to be part of that. But I think for me, that is one of the big elements that we try to work on, especially in thinking about implementing the strategy, right? Because implement deciding on the strategy is half the way. But how do I make sure that strategy connects to the person that is in the front line that is actually doing the work? Right? So, and that's type of thing that we try to do. So in our day to day, we interact all the way from the directors of operations, heads of supply chain, directs of logistics, warehouse managers, frontline supervisors and operators, because, and let's take one simple example, right? If we, let's say that we decided that we need to improve service.

Gabriel Alves Rodrigues 26:58

on time in full, right? Clear metric. Yeah, right? So as we go through this process of understanding where the flaws are, because before I go in there, maybe let's separate something, right? When we think about how we frame the problem, right? The problem is framed on an output that I want to achieve.

Gabriel Alves Rodrigues 27:28

In actual, for us at Infocony, how we define a problem, a problem is a difference between where I am today and where I would like to be, right? That is, that's it. So if I want to be at 300 warehouse per, pallets per person, or if I want to be at a 98, 99 % on time, in full, where I am today, that is my problem. Cool. Let's find a way to solve that. The causes are, in your processes, in your structure, in your team capabilities, in your controls, in your flows, how you organize yourself for that. So if you want to change that output, I need to change all those things. So in it to change all this, I need to be interacting with all these people. So I need to be sitting with the inbound manager and rethinking how we're going to do the inbound flow.

Gabriel Alves Rodrigues 28:23

what type of controls are we going to have on on time arrival that maybe they don't control today that is affecting their productivity because they have idle operators they're waiting for a truck to get docked. So maybe we need to start having those controls. We need to have rethinking the positions of people in the docks. We need to rethink the flow of the materials and we need to train that people so they can actually perform to that. So we

Gabriel Alves Rodrigues 28:52

That's why we interact with everyone because we need, we help and we support through all these stages of the change. So in the end, they can have new ways of working that going to deliver them that expected result. So that's why being actually, it's uncommon for us to be in the office, in corporate office, in front of the computer. It's more... Yeah.

Gabriel Alves Rodrigues 29:21

It is more common for us and for our team to be in the front line, in the shop floor with the teams implementing that. So we interact with everyone, to be honest.

Gabriel Alves Rodrigues 29:43

Yes. We as humans, hate change. And that's a reality, right? We as humans, don't like change. Change is uncomfortable. But I don't know who said that, but the definition of insanity is expecting a different outcome doing the same thing, right? So, and I think we take for granted that when we say something, we say,

Gabriel Alves Rodrigues 30:36

let's do this different or needs this needs to be done in a different way or this needs to be done in a certain way. We assume that everyone that listens to that understood the same thing, which is rarely the case. And so imagine a decision that that's made three layers above the shop floor, how that decision gets to the operator.

Gabriel Alves Rodrigues 31:05

right, how that reflects. So that noise gets propagated. So working with that alignment across the layers, I think that is one of the most important things for, to guarantee any strategy success.

Gabriel Alves Rodrigues 31:31

Exactly. And that's not news. I think that is something that people have been discussing for a while, but it's hard to do that in reality. It takes time, it takes effort, and it takes some training, coaching. I think that is the biggest element.

Gabriel Alves Rodrigues 31:55

Yeah.

Gabriel Alves Rodrigues 32:36

That's a great point. So we...

Gabriel Alves Rodrigues 32:52

Yeah, no, definitely. We have a perception. mean, I think that's not our perception. I there's a group in society that has a perception that technology will only exacerbate whatever you have in front of you, whatever signals you have, right? So how we translate that to our reality is If you have chaos in your organization, technology will only exacerbate that chaos and make it even more expensive. So we try to take a very pragmatic approach to technology, which is an enabler to solve a certain problem or to achieve even higher levels of performance. So I think whatever discussion about technology that is starting without

Gabriel Alves Rodrigues 33:51

problems that we want to solve or opportunities that we want to capture becomes very vague, right? Because of course, on the other side, is a lot of technology vendors trying to push their solution, but if that's not a problem for you, why would we be spending your time and resources to something that is not a problem and a priority for you right now? Yeah.

Gabriel Alves Rodrigues 34:22

Exactly, right? So I think there is this first thing that we normally try to do is to let's bring these discussions to technology. Let's ground this. Let's put this on a layer of reality, right? So I think that is the first thing that we try to do with our clients. I'm not saying that the potentials are there. I the potential is huge. And there are great companies doing amazing things with that. But to the majority of the organizations, they are not even ready to start talking about AI because if you don't have, for example, a great foundation of data and integration, your applicability for AI gets very limited. Your applicability to drive great improvements is very limited. So the way that we are approaching this with our client is probably... Probably, yeah.

Gabriel Alves Rodrigues 35:22

Yeah, I probably am. Yeah, I probably am. Yeah, I've seen, I've with some people, they showed up super excited with some technologies. And then when I asked him, but what problem are you trying to solve with this? And he said, well, this type of problem. said, how much that cost you? And he said, well, maybe one, two hours a week. And how much this solution will cost you? And he's gonna say, well, probably four times this. So where is your return on your investment for this? And sometimes they don't even know how to answer that because they haven't go through, right? So I think the excitement is good, but we cannot mix excitement with practicality, right? What is practical right now that I need to be focusing on? And there's a lot of things that are not, but it's...

Gabriel Alves Rodrigues 36:22

What we are seeing, especially in operations, there are some very specific use cases that are super real that we strongly incentivize companies to go for. Like, for example, if you think about materials handling, especially with basic operations, to feed the production line with with material to move pallets out of the production line within the warehouse. think those use cases are super solid right now. Of course, we need a lot of infrastructure to drive that, but those are solid. think about maintenance and predictability of failure. I think that is also a big one, especially for rotating equipment. I think

Gabriel Alves Rodrigues 37:18

that is also super clear use case, very high returns on investment. Some basic of process control with AI, especially if you have some isolated processes, and especially in manufacturing, if you think, for example, how you adjust your parameters of your machine so you can drive the best output of your machine, I think That is an interesting one that if you have already all the variables flowing through at a real good accuracy, good frequency of data points, I think that's also a very clear use case. And machine vision, I think it's also a super one. If you think about inventory counting, inventory control, quality inspection, not only in the production lines, but also in the warehouse, I those are super solid one.

Gabriel Alves Rodrigues 38:18

peak in place in technologies, there are some use cases that are useful, others they're not, you're not gonna see the ROI there. One interesting thing that we saw companies doing is they started to reduce the expected internal rate of returns for automations, for certain automation because

Gabriel Alves Rodrigues 38:46

the benefit wasn't the savings, the benefit became the resilience because of the instability of the labor force, right? Because suddenly you cannot operate because you are missing 15, 10 % of your operators in that day. But if you have the machine, that's not going to happen, right? So that also became an interesting thing around

Gabriel Alves Rodrigues 39:14

digital and automation and technology. But yeah, that is the path that I see. I think there are some very interesting elements when you think about the AI related to knowledge management and training that especially now, again, with the labor market, the competition for good people, I think that is a big one. And that's where we

Gabriel Alves Rodrigues 39:43

have been investing the most internally in our processes. It's how we make sure our consultants have the best information available in their hands to accelerate some of their insights and also some automation of some repetitive tasks. the biggest benefit is not in the productivity, it is in the quality of the output. So that is what we are seeing right now.

Gabriel Alves Rodrigues 40:52

Yeah, so if you think about the quality of the output, especially for us, it's about the level of insights that we can generate in the same amount of time, right? So instead of connecting two, three variables, two, three aspects, and providing, getting to a conclusion, getting to the development of a specific action, we can now incorporate other elements that help us to

Gabriel Alves Rodrigues 41:21

I strengthen that decision and even use that to show people and convince people why that is the best path to take for. So that is what I mean when I think about quality of output. And let's go to an example, right? So instead of looking only, for example, when I think about defining where or why we are

Gabriel Alves Rodrigues 41:50

losing our on-time and full services, instead of only going through which type of products, which type of regions, which type of suppliers or trucks we are using and that might be affecting this, we also start to incorporate characteristics of the SKU. We start to incorporate flow of material, on-time arrival,

Gabriel Alves Rodrigues 42:18

or even for example days of the week, traffic, weather, we can start to incorporate all those variables to get to a conclusion that would sometimes take more time and more iterations to happen, but now we are getting there much faster. Yep, more depth, yeah.

Gabriel Alves Rodrigues 43:25

That's great. what I'm seeing, especially thinking about the real estate, it connects really well with the more tactical and strategic discussions, because when you think about the more operational, once you are in that location, you need to take the most out of that. But I think what we are seeing is that the infrastructure,

Gabriel Alves Rodrigues 43:52

not only the location, but the infrastructure in itself is becoming more more relevant in the decision process. Not only when you think about the height of the location, the number of dogs, the floor, the lighting, right? Because all that are how you enable flow of material, flow of people, flow of products, all that

Gabriel Alves Rodrigues 44:21

is becoming more and more relevant. But also started to see things around, okay, what about the outside space, parking for employees? Because if I don't have good parking for employees, how am I supposed to retain my team and getting the people coming to work? And even facilities around the location that people can actually feel good about going to work, right? So...

Gabriel Alves Rodrigues 44:46

That is one example. We were having a discussion with one warehouse in California and they were exactly talking, listen, my parking, we don't have a fence around that protects my employees' cars and they have been jacked a couple of times. Now I have people that are not coming to work because they are concerned about that. those elements, I think it's start to become more relevant and especially when you think about automation,

Gabriel Alves Rodrigues 45:15

the stability and capacity to provide good energy became super relevant in the decision of the location in itself. But when you think about the whole network design, normally that's a decision that starts a couple of years, should start a couple of years before you see the problem, right? So it needs to be based on a mid to long-term forecast because it's not easy to do.

Gabriel Alves Rodrigues 45:45

And especially now when you look at the trends around where products are going, where which products are going to grow, which products are not going to grow, you need to start looking at, what is your real occupancy of your space? Because if you walk around the warehouse, you're going to think that is 85, 90 percent utilization. But actually, when you start looking in between the racks, there is a big difference between.

Gabriel Alves Rodrigues 46:10

your palette that is in that space and the configuration of that location. Right? So I think before, I think companies are being more cautious on before I change locations or move, how can I optimize my space or by utilization of the space where I am today? And that needs, we need to bring to that flexibility around the ranking structure. We need to bring flexibility around the docs.

Gabriel Alves Rodrigues 46:39

So, because I think that becomes a super relevant discussion. There's a huge cost when you think about shifting your network. So the upside needs to be super high. And everything that goes wrong here can kill your whole business case. Because if something goes wrong, you might not see nothing of the results that we're expecting. just to wrap up.

Gabriel Alves Rodrigues 47:08

I think that there is an increased expectation on how the locations can be flexible and sustain these future demands. And I wouldn't even say work with the tenant to how can we optimize and maximize what you get from this space, from this location. But there is also an increased

Gabriel Alves Rodrigues 47:38

analytical approach that companies are take as before they make those decisions on changing their network because the risks associated with that are super high and the benefits might not be enough to justify the investment. So that is what we are seeing right

Gabriel Alves Rodrigues 48:03

Yes. Exactly, exactly. It's not a simple process change that you're making that you can unchange that in a couple of weeks, right? If you're moving locations, it's going to be years are going to be tied to that. I think that collaboration or relationship, I think that is super important. And companies are being able to

Gabriel Alves Rodrigues 48:47

use that or to factor that more into their models as they are going to those network analysis to decide. We have much more data available. We have much more analytical capabilities today to help decide. But I also think that there is an aspect of relationship and willingness to collaborate that I think helps everyone.

Gabriel Alves Rodrigues 49:15

that has a current tenet on how I help you become even more productive and we increase our partnership.

Gabriel Alves Rodrigues 49:28

Yeah, yeah. I would even say, especially if these medium to smaller companies, there are several capabilities that a large company has that maybe some of those small companies, don't. And that eventually retail, industrial real estate companies could add as an additional services to those companies at a scale because you have multiple companies that could benefit from. So I think that is a way to help and collaborate and turn into something feasible, a capability that a smaller company might not have.

Gabriel Alves Rodrigues 50:21

Yeah, think about infrastructure, data integration. If you think about even some services around layout analysis to optimize, right? If you think about energy optimization, energy consumption optimization, those are certain services that get smaller companies depending on the moment they are, let's say a small growing company.

Gabriel Alves Rodrigues 50:50

They are not even looking at it. They're just concerned on shipping, shipping, shipping and get products out there. So being able to take that expert look, I think can be some value added.

Gabriel Alves Rodrigues 51:10

Yeah, yeah, that's it.

Gabriel Alves Rodrigues 51:48

I would love to. Thank you very much, Justin. Appreciate it.

Gabriel Alves Rodrigues 51:53

Thank you, you too.