Microsoft Corporation (MSFT) Earnings Call Transcript & Summary

Hello, everyone, and thank you for attending today's webinar, Reimagined High-Tech Supply Chains for the Post-Pandemic World, sponsored by Blue Yonder. Before we begin, I want to cover a few housekeeping items. [Operator Instructions] A copy of today's slide deck is available for download in the green resource list widget. Towards the end of today's presentation, we'll ask for your feedback. A survey will pop open on your screen and will only take 1 minute to complete. Your feedback is extremely helpful. An on-demand version of the webcast will be made available around 1 day after the event and could be accessed using the same audience link that was sent to you earlier today. I would now like to turn the event over to our moderator, Max Smolaks, Global Editor, AI Business. Max?

Thank you, Holly. Hello, and welcome to this webinar sponsored by supply chain management specialist, Blue Yonder. My name is Max. I'm the editor of AI Business, the online publication dedicated to artificial intelligence. And I will be moderating the discussion today and asking a few questions. Today, we will talk about the resilience of supply chains and semiconductor supply chains in particular. You probably know that the global electronics industry is suffering from an ongoing chip supply crisis. And it's not the result of any single event, but a combination of factors. The pandemic has meant that some chip fabrication facilities had to temporarily shut down, putting a squeeze on silicon supply and, at the same time, the sales of certain technology products went through the roof because, obviously, we've been all stuck at home. And PC hardware sales, for example, saw their biggest increase in a decade. The ongoing trade conflict between the U.S. and China, obviously, hasn't done silicon suppliers any favors. And now a lack of specific chips is threatening production of smartphones, TVs and even cars, and these are just a few products. These recent events have highlighted the vulnerability of modern manufacturing to any wobble in silicon supply chains. But how do you improve the situation? And this is exactly what we're going to talk about today. To discuss supply chain resilience and the role of artificial intelligence as part of supply chain modernization, we're pleased to welcome Shiva Esturi from Micron, Indranil Sircar from Microsoft, and Puneet Saxena from Blue Yonder. Hello, gentleman, welcome to the show. And just to remind our audience, this is an interactive webinar. If you have any questions for our speakers, please put them in the Q&A box that you see in front of you, and we will answer them at the end of the show. We will start with introductions, obviously. And first, it's time to meet Shiva. So Shiva, Micron is among the top 5 semiconductor manufacturers in the world. You're mostly known for flash and memory. Tell us a little bit more about the company and your role in it.

Yes. Thanks, Max. Good morning, and good evening, everyone. I'm Shiva Esturi, and I'm responsible for global supply management at Micron. And Micron, as Max mentioned, is a fourth largest semiconductor company in the world. And we operate in 4 different businesses, including computing and networking, embedded and automotive segment and mobile and storage business segment. And we may manufacture and supply DRAM and NAND. And it's very likely you will find Micron memory in one of your computing device that you may be using. And my role at Micron is, I'm responsible for global supply management and towards which, like my main role is to orchestrate the end-to-end supply chain between the business sales, manufacturing, procurement and fab, all the activities towards a common goal of like the cost cycle time and scale. And key functions includes the supply planning, inventory service level optimization and future of supply chain initiatives that we are driving at Micron. Thanks, Max.

Okay. Okay. But yes, just so we can -- so for a quick start. So from your vantage point, how has the pandemic affected high-tech supply chains? There's ongoing chip crisis. Has it touched Micron at all?

Right. Yes, good question, Max. This is something -- living through the disruption to the high-tech supply chain and also in Micron, what we witnessed at the ground level is a significant shift in the demand. Like as I mentioned, we operate in 4 different market segments. And there is -- in the early stages of the pandemic, the work-from-home slowed down the automotive and mobile demand, that's like last year around this time, and it increased the computing and the networking demand. And there was a -- very soon, there was a course correction and resulting the shift from computing again back to mobile and automotive demand segments. And second thing that's happened is the expansion of the current markets. Before the pandemic, everyone used to operate with like 1 computing device per home to or the mobile device per home to -- it became like 1 per person, increasing -- expanding the current markets. And in parallel, there is an accelerated growth in the new markets, including the 5G, IoT, the artificial intelligence and autonomous vehicles. So that's on the demand side of the equation. Secondly, the -- several companies, they managed very well, balanced the spread of containing the virus with stimulating the economic growth. And as a result, the economic growth was still able to achieve in spite of the pandemic. While like all this is happening and the supply, the demand prediction or the projection is unknown, so there was definitely a conservative some -- in CapEx, from all the CapEx investments from all the companies. And there typically, any expansion of additional capacity in the semiconductor industry takes around 12 to 18 months. And this converge like this slowdown in the CapEx investment definitely reduced a little bit the growth of the capacity. And in addition, the one other thing the pandemic also caused is the disruption that is time-phased. If you all remember, the initial disruption happened in the first -- started in China. The China portion of the supply chain got disrupted first, spread over to Europe, India, U.S., Malaysia. It spread gradually. That post a challenge about how the entire network balances. So that's kind of like how the disruption occurred on the demand side and the supply side, and so like the different portions of the network that caused across the -- globally basically.

Thank you, Shiva. This has been very expansive. And it's always good to hear about this from the people who actually manufacture silicon. Let's move on to Microsoft. Indranil, please tell us about your role at Microsoft and your perspective on the same question. How has the pandemic affected high-tech supply chains?

Thank you, Max. And I appreciate for being over here and part of this webinar, and good morning, and good afternoon, good evening to the people who are joining and listening to this webcast. The -- my role, first of all, I am a CTO for manufacturing industry within Microsoft. I also lead globally our high-tech semiconductor as a vertical. And in addition to that, I have also been working on developing our core strategy around supply chain across multiple industry segments. And so this has been my life over the last many decades. And so it's been a wonderful way of looking at how supply chain has evolved. But clearly, I think the pandemic has been one of those, even that most people don't expect to happen, don't plan to happen. Essentially, they will plan -- we plan for a lot of the disruptions but not at the scale, what we have seen over the last year, I would say, it's just been about a year now, a little over a year now when the pandemic has hit us. I think the first and foremost thing, like Shiva actually laid out very well, in terms of the demand and the supply impact across both the consumer or commercial side of it, but at the same time, the challenges in terms of leaving or building out that capacity. But I think what we have seen and heard from a lot of customers, and this has been one of our key areas that we focused very, very early on, is the workforce, and the impact on the global workforce regarding health and safety scenarios within the manufacturing and supply chain. And when we think about semiconductor as a supply chain, we don't -- we'd also include the manufacturing as a key part of it because that's the way how it is from the design through the manufacturing process is actually built out. And that impact has been quite severe for lack of a safe working conditions, lack of the right resources to be made available. And what they've been looking for as a first step was, how can they get to that remote operations capability? So to Shiva's point that the companies were moving more, looking for this computing in a remote location, it is also meant for the manufacturers themselves on how they can move into that remote operations capability. And our Microsoft CEO, Satya, actually talked about that. We were literally the first responders to the first responders, literally. And I think, essentially, being able to make that ability to work remotely was one of the critical part of it. And just to give you an example, design engineers, typically, they will use significant amount of computing on-prem, but they needed to move very quickly to use high-performance computing capability on the cloud and in a very secure way and continue doing that design. But we also saw that the support-related services were severely impacted, whether it is equipment manufacturers supporting remote side because travel was significantly restricted. And if you think about that global supply chain from China to Malaysia to Taiwan to Japan and all over the world, it became quite of a challenge, and I think technology gain, bringing this way of remote support using mixed realities and other things were very critical for them to do that aspect of it. Now the second part of it was the -- that because of the higher usage of the cloud and the computing, but there was also the need for building a trust in that supply chain. And it's not been new in the context of supply chain. People have talked about the supply chain security, risk, how do you actually define your risk strategies and the risk mitigation strategies, looking at how you actually securely collaborate across multiple domains, data sharing and other aspects of it. And the cybersecurity, in the recent days of number of events that most people are aware of it, and they were becoming a lot more critical in terms of making sure that they are able to -- we are able to address those requirements of the customers. And I think those were on the top of the mind. And most of these were on the infrastructure side. But shouldn't forget about the fact that one needs to also have that end-to-end visibility of the broader supply chains to be aware of it. I'm moving more towards this ability to bring disruptive capabilities. And so one of the things in the post pandemic that we have seen customer conversation-wise, is how can technology, disruptive technology, drive an industry-wide transformation? As much as you -- like Shiva mentioned on the CapEx hold, but are there ways how one could actually start to plan more for the future, creating the sustainable processes, building new products, new processes across this whole environment, bringing in automation and moving more towards this autonomous capabilities. And I think those are the positive aspects that we have seen as customers try to address, and grappling with these challenges of this demand and supply and the resource availability, the capacity, and the transformation, I think those were the key things that we have seen and actually has been the trend within the industry right now.

Yes. Yes, yes. It's very interesting how this crisis essentially -- crisis pushed the entire industry into these modernization efforts. Like, yes, the world has changed since the middle of 2020. Thank you. And now let's find out a little bit more about Blue Yonder, a company that actually makes software for supply chain management. And hello there, Puneet. Could you talk a little bit about your role at the company and your thoughts about what Shiva and Indranil just discussed?

Hello there, Max. And thank you, Shiva and Indranil for being with us over this webinar. For the benefit of the audience that may not know Blue Yonder, I'll just spend 0.5 minute telling you more about it. In a sentence, Blue Yonder solves complex supply chain problems. That's all we do. We've been in existence for 35 years. We are based out with Scottsdale in Arizona in the United States. I am the Group Vice President, responsible for our manufacturing industry strategy. And specifically, I focus heavily on the high tech and semiconductor sub industries. Micron and Microsoft are both Blue Yonder customers. They make good use of our solutions and they make their supply chains better. And to your question about what it is that we see, perhaps I can best illustrate it through a conversation that I had with one of our consumer electronics customers that is based out of the Asia Pacific, but they have a large sales arm here in the United States. So over this conversation, we were talking about e-commerce and how the buying patterns are changing because of the pandemic. And the way he illustrated the problem was the following. About a year ago, as the pandemic hit, the company saw a massive drop in demand. So inventory started building up. So washers, dryers, kitchen appliances, laptops, tablets, smartphones, so this company manufactures it all. Inventory started building up. There was a lot of nervousness, what are we going to do with all this inventory? And as Shiva was explaining, Max, you mentioned, too, that with all of us working from home, all of a sudden, there was a massive, massive spring. And the companies could not make enough when it came to appliances, household appliances, there's massive backlogs. And interestingly, this customer told us that when the stimulus checks started arriving, interestingly, the demand for smartphones went up. So consumers, when deciding how to best use the stimulus checks, found opportunities to use them in mobile devices, which would help them with their day-to-day lives. So I want to -- my perspective about what the challenges have been in the high-tech industry, focus around the areas that the audience will see on the screen. The high-tech industry itself is unique. It's -- it makes some of the most complex products that we often even take for granted because they work. But when you stop and think about it, these are some of the most sophisticated, the most complex products that exist in the planet. No one company makes it all. So it's a collaboration between many companies where Shiva's company Micron would make the memory chip, somebody else would do the assembly, bring the products together, and supply chains are global. And what you see on the screen here is where the challenges are. So in this industry, we, as consumers, need more, we expect more which forces high-tech manufacturers to go under rapid innovation cycles. And if there is money to be made, there isn't just one company producing those products. So there are many. There are more choices available for customers and consumers, which leads to lower product differentiation and higher cost pressures. And people look at supply chains to figure out, one, how to deliver to those expectations, and two, how to keep up with the cost pressures. At the end of the day, the challenges boil down to what we call the operational total shareholder returns. Right at the bottom of the slide, you can see that we're all trying -- each company is trying to drive a higher customer service. Without customer service, there is nothing good that will come to that company. So customer service is first and foremost. Revenue growth comes next. Then we're trying to do this, balancing the cost to serve, and this is where supply chain matters a lot and the cash that is tied up in the supply chain. So everything that we are seeing in the pandemic, the demand volatility, the cautious investments leading to the amplification of separation between demand and supply, the long cycle times it takes to bring capacity back has led to a renewed focus on supply chains. And the question that is being asked is what it is that we do differently? And as our discussion proceeds, hopefully, Max, we will get a little deeper at that.

Okay. Okay. Not just yet. Thank you very much, Puneet. And now it is time for our first poll question. So this is a question for our audience. Feel free to vote to let us know what you think. This is a no-strings-attached exercise. And my question to you is what do you consider to be the primary supply chain challenge today? Is it demand volatility? Is it supply constraints? Is it skill shortage? Or is it the lack of visibility? So if you could vote for any of these options to let us know what do you think. Yes, if you could please start doing that now, we'll be -- we'd appreciate that. So we'll give you about 30 seconds to vote. But next, we will talk a little bit more about Micron and what exactly issue we're doing and the Micron is doing to modernize their supply chain. So we've got about 18% of attendees have voted. I think we're going to reach about the quarter and then take a look at the results. All right. We're plus the quarter. So let's see what our audience is telling us. All right. So the main challenge facing supply chains today is the lack of visibility according to our audience, followed by demand volatility and with supply constraints on third place, skill shortage trailing in the back. So yes, my question, I guess, is to Puneet and Shiva primarily, does this correlate to what you're seeing within the industry? And we'll start with Shiva, I guess.

Yes. Thanks, Max. Yes, this -- it's kind of -- if we had one more question, all the above, probably like many votes would have come there. It's kind of like there is always a never-ending like innovation or the improvements on all these areas, the predicting, the volatility or the supply management and the right skill and as well as the visibility. It's kind of also in line with like a lot of things that we are seeing at Micron. And Indranil can comment on the Microsoft side as well.

All right. Indranil, does this make sense? And I will pose this question to you. So supply constraints are out of our hands. Demand volatility, we cannot solve, but can we solve the lack of visibility?

Yes, absolutely. And I think this is where our partnership with Blue Yonder, essentially bringing together a capability for -- ultimately, the visibility is also about how we can bring data together and get insight from the data. And the way how we have always looked at data is more in terms of, well -- but that's more on the reactive side of it because we are gaining insight from it and how do we actually do it. But I think the aspect of the visibility where the work after bringing the data where Blue Yonder and us have been working together, essentially, getting into becoming more predictive, and then ultimately taking that prediction to that autonomous space. And I think that's been one of the key area of focus because ultimately, when we think about -- supply chain is all about lots of different events that are taking place. How do you make a sense around the events? How do you actually prioritize many of those things? And they are generated from across, not just within the constraints of an existing supply chain, but externally to an organization supply chain from events that are happening within because of, let's say, because of the climate or weather or shipment delays and other things. And they all fit together essentially on that visibility. And so we see that the cloud becomes an enabler for bringing a lot of that data together, but then you'll have to have the approach of how you actually analyze those data and get that level of visibility, as an example.

All right. Thank you very much. I think in the interest of time, we will move on. And in the second part of this webinar, we will talk about specific measures Micron has taken to optimize its supply chain. So Shiva, given what you've seen during the pandemic, what would be expected of a leading high-tech supply chain in the post-pandemic world? So what changes do you need to be made? Where are you guys traveling at the moment? How are you like changing your operations?

Yes. Thanks, Max. Building upon like Indranil's comment with respect to hard to predict the pandemic or I can say it's impossible. And the -- at -- and instead, like how the supply chain can continue to add value to business by being very flexible. So we talked about the volatility of the demand, the shifts from the auto, mobile to compute and back to auto in the new markets, everything. So it's how do we optimize the entire supply chain network capacity as these shifts happen, by being flexible. And when I say flexible, it's the structural flexibility. Once the pandemic or any disruption hits, it's too late to make any structural changes. And we should enable the structural flexibility across the supply network. And then as any of these disruptions -- the demand disruptions or the geopolitical disruption occurs, then the entire supply chain rebalances. And it's -- a good time to have this flexibility discussion is when we are adding the capacity or increasing the supply base, and during the disruption, it's too late, right? Typically, most of the companies have the financial flexibility. It's the structural flexibility of the network is what is critical and so we need to pay attention to. The next one I would mention is the response units of the supply chain. It's like -- as we talked about this time-phased geographic disruption that happened during the pandemic or as the demands were shifting and the supply were getting tightened, then it is more of a -- the -- how the responsive the supply chain is to adapt to this demand and supply changes. And as the constraints are shifting dynamically, it's primarily making sure that we have the frequent foster planning cycle, the shorter response time to any of the events and the overall network cycle time to be the shortest as possible. And it also includes like collaboration between the business units, sales, supply chain, manufacturing and procurement and our supply partners, right? And the third aspect about the like supply chain enablement is the customer demand-driven. It's how do we make sure the entire supply chain is catering the unique needs of the product, tying the customers and so that like -- and also in a different supply-demand scenarios, right, like when the -- when there is overall tightness of the market or an allocation, how do we manage the demand and with the limited available supply and vice versa. So in summary, like in the post-pandemic world, like as you can see on the left side of the slide, the different disruptions that happened from the pandemic, the right side of the slide is the response where the post-pandemic supply chain to be like customer demand-driven flexible and responsive. It's more of this. It was not that before the pandemic this -- didn't exist, but it is definitely like more focused in the post-pandemic world to meet the customer demand-driven flexible and responsive supply chain.

Okay. Thank you. But if we dig a little bit deeper, what exactly -- because these are very good top level kind of guides, but what exactly do the companies need to do to enable this flexible, responsible customer demand-driven value chain? Like what kind of technologies can you use? What kind of infrastructure do you need to deploy? So could you talk a little bit about that?

Yes. Thanks, Max. So we have been thinking about it like as a part of the future of the supply chain vision and then there definitely the pandemic and some of these things accelerated these discussions and also the implementations at Micron. The -- towards enabling this -- the flexible response to your customer demand-driven value chain. The -- Initially, let's start with, many companies have a foundational system of record, which includes like all the planning capabilities, the advanced planning capabilities, and the cross functional, the processes and alignment between the business sales, manufacturing procurement and the overall -- the supply chain -- the overall supply chain and the talent, right, building upon this foundation, the progressing towards the next step is, there are a few technological capabilities that we can adopt that will help like being the supply chain the -- to optimize the supply chain better. Some of these I want to touch upon is the first one, the mission learning or the artificial intelligence. So here, like the way we are approaching is like while humans are very good in making few big decisions, at the same time, at this time, the mission learning or the AI approach is pretty matured enough to make a lot of small decisions, such as scale, right? So here like we are approaching it as like the complement, the machine learning algorithms to human decision-making. And think of it as the 80-20 rule, 80% the value and the 20% of the items, the decisions are made by the human while the long tail, the 80% of the items and then like 20% -- the small value decisions are made by the mission learning. It just opens a set of new opportunities where the humans are not like willing to do or like there is a lot of data available. If you take an excursion, quality excursions of those kind of things, we have like a lot of history, the -- and data around these excursions. The predicting for the new excursion, predicting when the excursions will be released, this can be data-driven or a mission learning algorithms-driven. So it's primarily like using the machine learning algorithms and the technologies to scale the decision-making at least to start with on the long tail the -- too many small decision items. The same can be applied on many cases, replenishment strategy and the inventory optimization to complement the human who writes those kind of things. And building upon this is the blockchain. The blockchain is in the very initial stages of the hype cycle. It just opens up a new set of opportunity in terms of the visibility from the whole. Max, you mentioned the visibility is one of the biggest hindrance. Think of it as like the customer supplier within our 4 walls and within cross-functional departments with our subcons and having this complete visibility, traceability and opens up new set of opportunities in terms of faster cash flow, information flow. And the -- some of the things with respect to geographic disruptions or the trade. Max, you talked about the China-U.S. trade war, some of these things, if it results in a 2-parallel supply chain, the blockchain will be an enabler for the entire supply chain, the optimization traceability and tracking. And building upon it, like the -- with the pandemic, many things happened too fast, these demand shifts I talked about and the other supply opportunities. How soon the supply chain can adopt, leading to the supply chain digital twin? When I say supply chain digital twin, when you might have heard about like manufacturing [indiscernible] where there is a digital replication of all the manufacturing activity. With respect to supply chain digital twin, it is like the digital footprint or the system is exact replication of how we think, run, operate business. This is talking about the entire ecosystem, keeping all the systems' data and inputs, and the decision-making that happens digitally that may mix the actual -- the business environment. Then it just like speeds up the frequent -- the planning and the response units, the planning cycle, like all this will be enabled by this digital twin. And then any new events, the system will be the first place where we configure it and then all other processes and then the -- will follow accordingly. And the other area I want to touch upon is the autonomous planning. The digital twin will be the enabler for autonomous planning. Think of it, if we go back in time, many of us who have been long time in the supply chain, if you go like 10 years back, the 80%, at least when I was planning, the 80% of the time was spent in creating the plan. And fast forward now, probably like more time, the 80% of the time is spent on analyzing the plan. Now how do we get to a stage where like 80% of the time is spent on actioning the plan where the plan creation and analysis is done systematically or autonomous, and then all the effort goes towards like actioning on the plan? So now if you have to trace back on all the different events happened during the pandemic or the disruption, it opens up the entire bandwidth of the supply chain talent to be actioning and mitigating the -- like the disruptions or even like optimizing the overall supply chain. It -- get to the chase directly on actioning the plan. And the last piece that Puneet touched about like some of the things with respect to costs, like -- there is a lot like -- everything we are doing here, the demand-driven or segmentation to meet the customer requirements or the product needs kind of a thing, right? How do we get -- like the cost to serve, what is the cost to add those capabilities in the supply chain? And what is the value that it is bringing to the customer? Just get -- include these into the pricing equations. And it's not necessarily I'm saying like these need to be charged to the customer. It is at least like having like self aware of the cost to serve and then the value like each of these capabilities that brings to the customer and having that visible across the supply chain businesses -- business every time the sales partners. These are some of the things the -- that wanted to call out, Max, that we are looking into and then we are exploring and implementing. Each of these are at different stages of implementation with Micron towards enabling the supply chain progressively.

Thank you very much, Shiva. This has been very expansive. Some good notes here. We received a gentle criticism of the typeface on the slides, but the slides will be available after the show. So if you want to take your time with the slides, those certainly will be available. And now it's time for our second poll question for the audience. So feel free to vote to let us know what you think. And this time, we want to know what technologies are you exploring in the context of supply chains. And we've got a list of usual aspects here, IoT, machine learning, blockchain, 5G, digital twins, autonomous planning. So if you could please vote on the poll and let us know, like if you're interested in many of these technologies, if you're exploring any of these technologies. And yes, we will ask our members of the panel, what they think about your favorites. While that is going on, if I can just remind you that we do have an interactive Q&A at the end of the show. [Operator Instructions] And we will get back to you at the end of the show. Anyway, I think about 15% of our attendees have voted. I think we're going to reach a quarter again, and then we're going to take a look at the results because this one is interesting. Honestly, do you guys have any guesses, like what could come out on top?

My suspicion is that machine learning should play a role, but let's find out.

All right. So let's take a look. We've got about 1/3 of our attendees voting. There we go. And you are right, Puneet, absolutely. Machine learning, with almost 1/3 of the votes is the technology our viewers are exploring at the moment, followed by, let's see, it's blockchain and autonomous planning, tied for the second place, and then IoT and 5G and digital twins. So again, does this correlate to what you're seeing in the industry? And more importantly, does this correlate to the questions you get from your customers? So yes, I see Indranil there. Yes. You want to comment on this?

On the machine learning part of it?

Yes, absolutely.

Yes. No, absolutely. I think that's -- Shiva laid it out very well. In fact, the fact remains that we don't see that everything is going to be automated. It's basically going to complement the human resources, human ingenuity and being able to work with the data and the systems. And what machine learning does is elevates the insights into a level where people can then make much more informed decisions. But I think where -- one of the interesting part of it, and we'll talk a little bit more is what machine learning is also doing is in its learning on the decisions that are being made. So essentially, what it does is it is a continuous learning system when it comes to the supply chain. And if you think about the people who makes these decisions, the newer generation of the people that are coming into the supply chain as an example, they can leverage this knowledge that has been built over years of experience from others and then being able to be much more responsive, which is one of the point that Shiva also talked about, that how being responsive to those requirements, that machine learning is going to play a significant growth there. And then I think that's been an area.

All right. Thank you very much. And in the interest of time, we will go straight to Puneet next. So Puneet, yes. We've heard very good kind of explanations of the challenges facing supply chain. Let's talk about what needs to be done and how it can be done. So what are you hearing from your customers on how their supply chains need to perform moving forward? And what makes a modern supply chain in 2021? So Puneet.

Absolutely. And I'll build upon the comments from Shiva and Indranil, the response from our audience and also what we are observing. So building upon the previous -- from the session we had around the challenges. The things that you see here, around the cycle, are the things that our customers and companies are asking. I was -- I noted with interest in the first survey response, the audience mentioned the lack of visibility was a concern for them. And indeed, if we start from the top left, access to real-time information. So there is -- we used to say that the enemy in -- for supply chain practitioner is volatility, demand volatility, supply volatility. If there were no volatility in -- on the demand or supply side, life would be absolutely smooth. So those challenges have not gone away. But the other challenge which has emerged is the latency in the supply chain. By latency that I am working with information that has stayed. And the world changes very quickly. And if I'm making decisions based on information that was collected 24 hours ago, 48 hours ago, it's not good enough. So access to real-time information, real-time visibility is likely important. So this is what companies will need to have moving forward. As things change, the ability to change supply chain plans on the fly, faster responses to changes. So let me actually make it real. Becton Dickinson, GE Appliances, they've built using Blue Yonder solutions. They've got -- using our control tower capabilities. They've got access to real-time information where the inventory is across the globe as it is moving through and -- well, Becton Dickinson, I think they were published in forms as well. And as they benefit the pandemic and did great things to help with the pandemic with medical devices, they took advantage of technology that was available to them. The largest semiconductor manufacturer in the world is exploring what they call rapid demand-supply matching. But as things change, how do I keep up with what I need to do in the supply chain. And I think through what-ifs at scale and think through potential scenarios before they happen. One of the large server manufacturers for data centers, they are using machine learning techniques to predict demand better. And they've seen more than 10 percentage points improvements in the accuracy relative to traditional statistical techniques that have been used and consensus planning techniques that have been used for decades. One of the large semiconductor manufacturers in Europe is looking at machine learning to predict disruptions. So by that, I mean, that if a wafer lot is in the fab, then by looking at real-time information online metrics, what will the yield be once this lot reaches the end of the line? So these are new things that were simply not being used in the past. So as the audience and the companies think through what they need, condensed message is that, speed need to go faster. If we're going faster, we'd better be able to see much more clearly and much more in real time. And if we are making that many more decisions as we're going faster and all these real-time pieces of information are falling in our laps, we better, as Indranil mentioned, we'd better start thinking about how we automate some of these things. And that's where companies are going and technology is playing a role and helping enable that.

Thank you, Puneet. So we talked a little bit about software, you touched upon it, but let's talk about the technological changes on the ground. So this is a question for Indranil. How has technology around supply chain management evolved? And what can help you deliver on these new lofty expectations? Like how has the infrastructure landscape changed? And what does Microsoft specifically doing with its cloud platforms? That's what we're talking about, this cloud.

Yes. No, I think the -- first and foremost, I think cloud has been a game changer when it comes to supply chain solutions. And specifically, the softwares that are taking advantage of the various cloud-enabled capabilities are getting a significant benefit by bringing in additional data points. And so you're talking about lots of sensor data, IoT data, like Puneet was talking about, becomes quite critical. And I think the key shift that we have seen is from being a very linear supply chain to become more of a network-oriented supply chain. It's basically unlocking the higher service levels, optimizing the cost and the dynamic responsiveness of the overall supply chain itself and bringing together those orchestrated processes, which is more insight-driven, and also this aspect of the predictive operations. And more importantly, it's actually creating this whole closed group end-to-end capability within the supply chain itself. Now typically in the supply chain world, as we think about it on the right-hand side of the slide, I actually shared this, is that there are physical flows, which is about the physical movement of the materials and how we actually deal with that, the information flow, everything from orchestrated processes, et cetera. And then the financial aspects of it too is in very, very critical part of it. And Shiva touched upon how blockchain will enable some of those aspects of it. But I think the importance part of it, I mean, from Microsoft perspective, we are a platform provider. I mean, we basically build the platform that enables many of these services working closely with Blue Yonder in this particular case, but also with our key customers, our customers and partnerships that we are building, someone like with Micron. And I mean, if you really look at it, the supporting framework that we actually enable in driving at a technology level starts at that digital platform capability. The underlying -- all those core things that is built around the foundation of a trust, the security, the privacy capabilities, how do you actually enable a secure way of communicating and managing that aspect of it. The second element of it is that in the newer paradigm, the data is the foundation. Data is the way how people will look at it, and the data is available. And I think what we are seeing in a massive scale, customers are creating this modern data estate, how you actually look at the data, where you bring in the data and how you use the data for different kinds of insights and the workloads that you drive. But ultimately, using the foundation of that trust, and which is also not just about the security, it's also about risk. It's about using that traceability aspect of it, where you actually create that secure supply chain. And I think those are becoming the key part of it. But then the other aspect of it, and we touched upon, throughout this conversation today, is the workforce. It's the people processes, how do you actually enable them from -- not just from the ability to work remotely, but collaborate, share information, not just within the environment, but also into the broader aspect of reskilling the workforce into that next generation. And so -- and Shiva touched upon these 2 elements, the blockchain. And within Microsoft's own supply chain and the Azure supply chain is a massive operations. You can imagine that we run our cloud infrastructure at a planetary scale. And it is a -- it needs the level of visibility, it needs that level of capability and our partnership with Micron. And we have been building out this blockchain as a capability to drive, that digitizing the objects that encompasses all financials, the documentations, and the physical goods at a serial level grade as an example, that enables anticounterfeiting, sustainability conversations, avoiding conflict materials that is getting into the supply chain, all of those aspects of it. And just very recently, Gartner recognized Microsoft as the overall winner of a supply chain breakthrough of the year for using blockchain as an example of it. And the other aspect of it is the digital trend, which actually, Shiva also touched upon, is also getting a lot more interest for a couple of reasons because now we are looking at data in a way where we could actually do different things, not at the physical level, but at a virtual level. So essentially, we can run simulations. We can rewind and replay and understand what is going on. And I think that's been a hugely new development area going forward within this particular cases. Now I mean, other things are also important. In the interest of time, I may not have time to go through all of them but also like, for example, the autonomous capabilities, not just within the planning, but we are talking about within the warehouses, like the autonomous mobile robots or using things like mixed reality in helping the workforce on how they pick and pack materials within warehouses. They are all starting to play an important role within those context of the technology.

All right. That has been very extensive. And again, you touched on some very, very interesting points. Like I wish we would have more time to talk about blockchain, for example, but unfortunately, not today. Let's come back to Blue Yonder. So Puneet, we're in a publication, but we're primarily interested in AI. So how do you use AI to reimagine supply chains of the future? How is Blue Yonder specifically enabling businesses to use AI? Like how easy or hard is this process? What do you need to keep in mind?

Exactly right. Good question. And this is why I love speaking with practitioners like Shiva and solution platform-enablers like Indranil because everything that we've been talking about, some time ago in digital twins, autonomous planning of words, but they're bringing that to life. So the way we are getting to the use of artificial intelligence and machine learning techniques and supply chain, we have partnered closely, Blue Yonder has partnered closely with Microsoft. In fact, our entire solution portfolio is now available on the Microsoft Azure platform. Microsoft, as your audience knows, Microsoft is the leader in enterprise and cloud applications, the solutions, the platform, and we build upon that platform, the supply chain applications to solve the complex supply chain problems that we have been discussing over the course of this webinar. So the Blue Yonder portfolio basically takes advantage of the modern platform that is available through Microsoft, the Azure platform, in developing these capabilities. And if you look at our portfolio, and you look at the supply chain problems in this -- that -- maybe I'll build it from the ground up, which is the Azure platform, which Indranil spoke about, we build our capabilities on top of that Azure platform, we call it Luminate and a lot of these capabilities around integration and connectivity with IoT, data management, workflow, AI, ML. That's become -- that's available to us through the Azure platform, and we do our development on top. And we take our applications to market in 3 categories. We go look at planning, execution and commerce domains. So these are the solutions that we are able to take to market. And we've been fortunate, just as Indranil was making reference to Gartner, in all the supply chain specific Magic Quadrants that Gartner publishes that who wants supply chain planning, the transportation management or warehouse management. Our solutions have always been in the leaders quadrant. So we've been doing good things with our solutions, thanks to the technology that Microsoft helps bring to the market and thanks to the innovative forward thinkers like Micron and Shiva.

All right. And I'm conscious we're almost out of time, but my last question is to Shiva. So what does it take to manage all this change? Can it be done? How difficult is it? And in a couple of words, what is the role of people in it? So we talked about infrastructure. We talked about software. What is the role of people? Are people now like completely unnecessary?

They're most important. Just before I answer this question, Max, like I want to clarify on the time-phased geographic disruption. It was where the concentration of the event happened or like with the supply chain temporarily got shut down. That happened like at different places, at different time. That's what I was referring to, not like -- the pandemic was global. It was more of the -- when the shutdown of the supply chain geographically happened. That's what -- what's reference said. With respect to managing the change, right, like the big transformational like there are different ways to approach the change. I think the following sequence help the best. If it is reengineering effort or a big transformational, like implementing a big ERP or a planning system or a Blue Yonder system, though always going with transform the people where the people define the mindset or the -- in the to-be process and who will define the to-be processed basically, and then the system quickly follows. This leads to fastest benefit or return of investment. And the second, there was also a question about like how do we prioritize it? So like a lot of the advanced technologies that we are talking about, mission learning, blockchain, many of these things, like the way we think of it is running the business, which is running the quarter's monthly shipments and all those things. The second is transformation. They're transforming the business within like here, there is a big [indiscernible] or the big projects that is done in a manner, people, process, system, change. And the third portion is a very nimble and exploratory team. Try and fail fast even if something doesn't work. Like a lot of these things, mission learning, blockchain, many of these things is like how the use cases and how do we get like fast to the benefit and how do we operate in a very nimble and agile manner. And the last piece is transforming the organization. We need to keep up the pace of the skilling or upskilling the team or expose the -- all the supply chain organization with all these technologies. And then basically, the coexistence of the people, process and the technology needs to happen, and all of them have to move at the same pace for us to make a significant [ difference ] towards the supply chain.

Thank you very much for that, Shiva. And I'm afraid this is everything we have time for today. So thank you to our panelists, and thank you to our audience. We did get a few questions submitted via the Q&A box. And we will have to answer them by e-mail. Rest assured, they will be answered. But thank you for watching. And yes, if you want to find out more information about any of these kind of products or services, well, yes, they're all available online. So thanks, guys.

Thank you.

Thank you.

Thank you.