Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
FS Podcast | David Pelsoci, Captios Partners
509 Plays3 months ago
David Pelsoci, managing partner with Captios Partners, talks about the digital product cycle and what feed mills can do to improve their operations.
Recommended
Transcript
Introduction and Conference Overview
00:00:11
Speaker
Welcome to Feed Strategy Podcast.
00:00:14
Speaker
I'm your host, Jackie Remke, Editor-in-Chief of Watts Feed Brands.
00:00:19
Speaker
This edition of Feed Strategy Chat is brought to you by the Feed Mill of the Future Conference.
00:00:25
Speaker
The half-day conference held on January 27th at IPPE brings together feed industry experts to examine emerging technologies poised to shape animal feed manufacturing.
00:00:36
Speaker
The event is produced by Feed Strategy and Feed and Grain and organized in partnership with the American Feed Industry Association.
00:00:43
Speaker
For additional details and to view the full agenda, visit www.feedmillofthefuture.com.
Meet David Pilsacki: Background and Role
00:00:51
Speaker
Today we're joined by David Pilsacki, Managing Partner with Capito's Partners, a consultancy that supports clients through the entire digital product cycle.
00:01:01
Speaker
He's here to talk a little bit about that digital product cycle.
00:01:05
Speaker
and what feed mills can do to improve their operations.
00:01:09
Speaker
Hi, David, how are you today?
00:01:11
Speaker
I'm doing well, thanks for having me on.
00:01:14
Speaker
Thanks for being here, David.
00:01:16
Speaker
Now, why don't you tell us a little bit about yourself and your background?
00:01:20
Speaker
Yeah.
00:01:21
Speaker
So a little bit about my background, agronomy degree from University of Illinois.
00:01:25
Speaker
I thought I wanted to get into grain trading in Chicagoland.
00:01:29
Speaker
Life had other plans and I got recruited to implement ERP in supply chain.
00:01:34
Speaker
I diversified across different technologies into CRM, data platforms, some AI solutions, and ultimately made my way back into some agribusiness clients and realized that
00:01:45
Speaker
It was an area that really under, I would say appreciated from the tech consultancies, but also a big opportunity to help and really plug in and be that advisor for that market.
00:01:57
Speaker
Tell us a little bit about Captios and what you're doing there.
00:02:01
Speaker
Yeah, absolutely.
00:02:03
Speaker
I kind of jumped into a little bit there, but Captios is essentially that.
00:02:07
Speaker
So think your typical tech advisory plus systems integration firm, where we specifically focus that on kind of the mid-market agribusiness world.
00:02:18
Speaker
So animal feed manufacturing is a huge component of that.
00:02:22
Speaker
We do a lot of work in the grain space, do a lot of work in production, livestock, and then financial services surrounding that is really our area of expertise.
00:02:32
Speaker
We offer both tech advisory, kind of thinking through what are those strategic questions?
00:02:36
Speaker
How do I implement AI?
00:02:38
Speaker
How do I think about my cybersecurity stance?
00:02:40
Speaker
How do I think about my increasing costs and budget, et cetera?
00:02:44
Speaker
As well as that will often end up in a recommendation to implement a certain technology.
00:02:49
Speaker
So we will then implement, I would say most like 80 to 90% of the technologies we talk about with our customers, whatever we don't implement will operate as sort of a trusted partner.
00:03:00
Speaker
And so a lot of the customers we work with, some have, I'll call it lightweight IT and tech capabilities.
00:03:05
Speaker
Many are really starting from scratch.
00:03:07
Speaker
So we're talking anywhere from a 50 person feed mill.
00:03:10
Speaker
If we're going to talk in the animal feed space to tens of locations type operations, and the numbers can range pretty widely.
00:03:17
Speaker
So anywhere from kind of your
00:03:19
Speaker
20 to $30 million business top line up into, we've got a couple of customers that are well into the billions.
00:03:25
Speaker
So pretty wide market that we serve, but the idea is pretty consistent that we want to be a place where you don't have to work with many different consulting firms.
00:03:32
Speaker
You get someone that really knows your industry and your space well, and combines the business outcome orientation that you heard me talking about earlier with the technology that's going to help actually make that a reality.
AI and Data Integration in Agribusiness
00:03:47
Speaker
Given your background in agriculture and your experience, what would you say is the most exciting development that's happened regarding tech and agribusiness in the last, let's say, five years?
00:04:03
Speaker
Yeah, I think it's kind of a little bit understated, but I would, you know, especially AI and the cost of managing a lot of this tech has come down and become a lot more affordable.
00:04:13
Speaker
We see a lot of businesses that previously didn't really have access to these sorts of capabilities now getting access to it.
00:04:19
Speaker
And that's a lot of the reason we've formed this company, because there's now this big question of where do I begin with all these tools that are available to me and how do I navigate that?
00:04:27
Speaker
So that's one area that's really exciting.
00:04:30
Speaker
Another area that I think is really understated is obviously there's the physical real world connection of this being the food supply chain.
00:04:37
Speaker
But with that comes a huge amount of data availability, given the integration to the physical real world.
00:04:44
Speaker
And so there's a lot of whether we look at production, agriculture, animal feed, grain,
00:04:48
Speaker
There's a tons of opportunity to really integrate data more and more to really help improve AI and visibility solutions.
00:04:56
Speaker
So, ag, I would argue is a uniquely positioned industry to really capitalize off that intersection with the real world.
00:05:05
Speaker
What are feed mill operators getting wrong when they think about AI and digital transformation technologies?
00:05:13
Speaker
It's a good question.
00:05:14
Speaker
The easy goal and target is to go straight to all the exciting stuff and skip over a lot of the key sort of foundational building blocks that you really have to make sure are implemented.
00:05:25
Speaker
So we actually, we kind of joke with a lot of our customers and call it the eating your vegetable phase.
00:05:30
Speaker
A lot of times that shows up in the way of you still have to do things and think about process improvement.
00:05:35
Speaker
You still have to think about data quality.
00:05:38
Speaker
Those things are very challenging things to fix, but in one that you can't wave a magic wand and hope that it's fixed without the hard work.
00:05:45
Speaker
Another thing is thinking about your overall tech capability and budgeting and planning for it.
00:05:50
Speaker
Oftentimes we work with early customers who think it's kind of a one-off and a one and done project.
00:05:56
Speaker
I would actually think more of your technology and digital data, software, AI as an asset.
00:06:02
Speaker
And that asset requires maintenance.
00:06:04
Speaker
It requires reinvestment in order to get the benefit and value that you'd expect out of it.
00:06:11
Speaker
The last thing I would say on that is really trying to take on a lot of these more ambitious technology projects on your own.
00:06:19
Speaker
I can't tell you how many customers we began working with where it began as a side project.
00:06:24
Speaker
That ultimately doesn't play out very well.
00:06:27
Speaker
And the challenge there is that
00:06:28
Speaker
You lose a lot of trust and momentum.
00:06:31
Speaker
That is very important to get with a lot of the tactical people on the ground that are living this day to day.
00:06:36
Speaker
So it should be taken a lot more formally and seriously.
00:06:39
Speaker
And we would say at a minimum work with a partner that can at least give you a sort of river guide, give you a North star on what you should be thinking about and how you should go about it.
00:06:49
Speaker
So in a previous discussion, we talked about, feed mill digital twins.
00:06:54
Speaker
Can you please provide a concrete example
00:06:57
Speaker
of how digital twins have helped one of your clients reduce costs per ton, improving throughput?
00:07:05
Speaker
Yeah, absolutely.
00:07:07
Speaker
Maybe before I jump in, I'll just give a very high level to recap what a digital twin is.
00:07:13
Speaker
A digital twin is basically creating a digital replica of your entire, in this case, animal feed operation.
00:07:20
Speaker
So that's taking all of the different data inputs.
00:07:22
Speaker
That's ERP data, that's PLC data from your automation tools, that's CRM data, that's shop floor data, inventory, you name it, the whole bit.
00:07:32
Speaker
And the idea is that you get a digital replica of your operation and this tool can operate as that control center that gives you a heads up and really enables a number of things.
00:07:42
Speaker
One can give you a heads up of things before they happen in a predictive way.
00:07:46
Speaker
It can also help you optimize and think about what if scenario planning.
00:07:51
Speaker
I'll jump into the scenario planning in a moment, but as far as kind of clear examples of where this has really improved from a commercial and cost perspective,
00:08:00
Speaker
is when we think about the logistics and the logistics flows area and the animal feed operation.
00:08:05
Speaker
So optimizing delivery routes, load scheduling, inventory optimization.
00:08:10
Speaker
We've seen up to 25% cost reduction and more complex logistics operations where there's, let's say multiple plants, long distance halls, bag routes and backhaul opportunities.
00:08:22
Speaker
Trucks, as we know, aren't cheap and drivers aren't exactly growing on trees.
00:08:25
Speaker
So optimizing for this can be really beneficial way.
Understanding Digital Twins and Their Benefits
00:08:29
Speaker
And a digital twin is more holistic, but this is one area where it really kind of pinpoints clear value.
00:08:35
Speaker
Back to that scenario analysis, because it is a little bit more broad and covers your entire operation, it enables you to do scenario analysis.
00:08:43
Speaker
So let's imagine, for example, you can ask questions like, if I upsize my mixer, what will be the overall impact on throughput?
00:08:50
Speaker
Where is the next bottleneck?
00:08:52
Speaker
You can model out those changes to reduce the risk of implementation before actually doing it, avoid costly mistakes.
00:08:59
Speaker
And then, and what that enables is really clear speed improvement of speed and your decision-making because you've got a lot more data and data in front of you, as opposed to operating off gut and intuition.
00:09:11
Speaker
Just one last hard example on that is, you know, one of our customers using a simulation environment in the digital twin and determining what they're looking at was the effect of batch changes in the overall production and yield.
00:09:24
Speaker
And so using the tool optimized that batching strategy that increased yields by about 15% out any additional investment, which is pretty, you're really squeezing a lot more out with the same amount of resources and these sorts of tools can pay for themselves.
00:09:38
Speaker
as you can imagine, very quickly, like in that three to six month timeframe.
00:09:42
Speaker
Lots of hard examples that are very real even today.
00:09:47
Speaker
Well, thank you for that insight in the example.
00:09:50
Speaker
Feedmill operators still struggle with basic system integration.
00:09:55
Speaker
How do you tell someone who's in that position that they should be thinking about using AI in these digital technologies?
00:10:03
Speaker
So ERP systems integration very much falls into that vegetable eating category that I mentioned above.
00:10:09
Speaker
The big question there that we work with our customers and clients to think about is does your physical real life business process, is that accurately reflected in your software?
00:10:21
Speaker
Is your software all properly integrated and does your software throughout these processes force high quality data in all the transactions that it creates?
00:10:30
Speaker
If the answer to that is all yes, which is a long journey often for many customers to get to, you're now ready to kind of go to the next stage with the idea being that you now have data that is reflective of your business.
00:10:42
Speaker
And you can start implementing more advanced tools like analytics tools to get real time pinpoint visibility into what's happening to your business.
00:10:50
Speaker
Again, no intuition at this point, but all real time data about what is actually happening at the cost level, at the plant level, at the product level, et cetera.
00:10:59
Speaker
And it also positions you for now taking on more advanced AI solutions as data as a key input to build any sort of custom AI solution.
00:11:08
Speaker
So that's kind of the path that you still need to continue down is to keep doing that vegetable eating until you get there.
00:11:14
Speaker
However, in parallel, there are options to implement off the shelf tools that aren't really necessarily related to your ERP, but can help your improve your day to day, I'll call it efficiency.
00:11:25
Speaker
So examples like integrating a secure connection with a large language model and using that to improve your day-to-day tasks, like all the cool things that large language models can do, but especially in the HR and back office activities, there's a ton that can be done with off-the-shelf tools.
00:11:42
Speaker
And then lastly, what we're seeing more of is that ERP and related tools are actually embedding AI into their tools, so you don't have to do it.
00:11:50
Speaker
You get the benefit of their investment
00:11:52
Speaker
and really get the outcome of it without paying for it upfront.
00:11:55
Speaker
You know, now I will say those that can find that cost can come through in your subscription model, of course, but you don't have to make huge capital investments to make this happen.
00:12:06
Speaker
So examples of that include AP automation to speed up, for example, invoice input and reconciliation as an example.
00:12:16
Speaker
You've got bin sensors that use R and VR capabilities to tell you inventory levels.
00:12:21
Speaker
You've got surveillance cameras that can auto detect kind of unauthorized personnel.
00:12:26
Speaker
So there's some of these things you can do while you work on your ERP or are sometimes even embedded into the ERP processes.
00:12:33
Speaker
So lots of ways you can creatively start getting going on that without making these huge leaps and huge commitments.
AI-Driven Maintenance Strategies
00:12:42
Speaker
Well, let's talk about predictive maintenance.
00:12:44
Speaker
What's the difference between a mill that's doing maintenance by the books
00:12:50
Speaker
versus one that's using predictive models.
00:12:53
Speaker
What does that look like?
00:12:54
Speaker
Yeah, the way I would think about this question in two parts.
00:12:57
Speaker
One is kind of thinking about the scheduling of the maintenance and the preventative maintenance itself, as well as how does the preventance capability work itself.
00:13:06
Speaker
I'll talk about the scheduling example first.
00:13:08
Speaker
So in the by the book scenario, you've got a maintenance schedule that's very sequenced, very planned, very organized and standardized and documented.
00:13:17
Speaker
The problem with that is it is not necessarily dynamic and follows a more strict schedule typically.
00:13:23
Speaker
When you use tools like Digital Twins, you can dynamically take into account that there might be production inventory shortages or scheduling shortages or outages, excuse me, production outages or different
00:13:35
Speaker
challenges to the production flow in which you might say, well, we actually don't want to do preventative maintenance.
00:13:41
Speaker
And if production is down that day, we're going to have the system automatically give us a notification to reschedule that to a better day or at a better time, as an example.
00:13:50
Speaker
Moving on to the actual preventative maintenance part, you know, how that's actually practiced as you input and integrate many times retrofit your control automation systems and operation lines with
00:14:02
Speaker
These preventative maintenance tools that actually will take all the data in about the tool and historical production data, input data, output data, humidity, temperature, every variable you can practically think of and try and give you an idea of when that particular part is going to fail.
00:14:19
Speaker
And then schedule maintenance enough time so that your production is not affected and you can keep that production line up.
00:14:25
Speaker
So it's really thought, we think about it in two parts, different tools for different things.
00:14:29
Speaker
Sometimes some tools can do both, but that's really how it's actually happening in the real world nowadays.
00:14:35
Speaker
It's worth noting that all of these AI related tools, having clear data, accurate, usable data, accessible data is one of the biggest hurdles that we often see for clients.
00:14:47
Speaker
Once you get past that part, which is usually again, falls in that vegetable eating category, you can, it's actually quite straightforward in terms of implementing these types of tools.
Measuring ROI and Efficiency in Feed Mills
00:14:58
Speaker
Great.
00:14:58
Speaker
Now what's one metric or outcome feed operators should focus on to demonstrate that these technologies are
00:15:06
Speaker
worth the investment or working as intended?
00:15:09
Speaker
Yeah, great question.
00:15:11
Speaker
We like to tie things back to any kind of commercial outcome and business outcome with the tech work that's considered.
00:15:16
Speaker
So pretty simple at its highest level.
00:15:19
Speaker
So clear return on investment of these specific initiatives and having a clear understanding of what the cost is going to be and what the potential upside will be commercially speaking.
00:15:28
Speaker
So
00:15:29
Speaker
Are you gonna be looking for savings or are you gonna be looking for yield improvement or revenue improvement, whatever that looks like?
00:15:36
Speaker
That's how we use that metric as our North Star to really decide if something's worth the investment.
00:15:42
Speaker
Another sort of, I'll call it soft metric is that when having these conversations specifically in the animal feed space is typically speaking,
00:15:51
Speaker
There's been a large underinvestment in digital technology.
00:15:54
Speaker
And the way to work around that has been to hire a lot of people kind of papering over a lot of the challenges and creating process to fix the gaps that exist.
00:16:03
Speaker
You have a lot of these companies eventually hit a wall of what that kind of manual process can support.
00:16:09
Speaker
And they kind of reach the ceiling of what's possible.
00:16:13
Speaker
So taking that next step where you can continue your growth without adding significant headcount in the form of improved visibility
00:16:21
Speaker
in the form of improved efficiency, that really justifies and creates that platform for further growth in the future.
00:16:29
Speaker
And then the last point, we want specific metrics in addition to ROI.
00:16:33
Speaker
And one that we see and talk a lot about that really ties through to my last point is thinking about cost per unit and throughput in general.
00:16:40
Speaker
I mean, those kinds of core metrics really set the scoreboard, historically speaking, and looking into the future when we look at an improved process.
00:16:49
Speaker
kind of give you the before and after to tell you if it's actually working or not, if you're seeing the improvements you're expecting to see.
00:16:55
Speaker
So very much tie how we think about tech to the actual business outcome and that scoreboard that I mentioned.
00:17:03
Speaker
We've talked about a lot of different things during this conversation.
Digital Maturity and Future Impact of AI
00:17:07
Speaker
Looking ahead, which technologies do you think will have the greatest impact on the bottom line of feed mills and feed operations?
00:17:19
Speaker
I would think about it in stages and different female operations are in different stages of their digital maturity.
00:17:25
Speaker
So we have the table stakes kind of discussions about your infrastructure.
00:17:30
Speaker
Where are you physically hosting your technology?
00:17:32
Speaker
Is it secure?
00:17:33
Speaker
Do you have connectivity?
00:17:34
Speaker
Those are kind of table stakes to even really operate.
00:17:37
Speaker
modern and competitive businesses these days.
00:17:40
Speaker
The next one where most people are at is that system integration core application layer, where we want to really make sure that those processes are properly reflected in the software and it's integrated across all the different business capabilities and so on.
00:17:54
Speaker
You have that real life data view of what's happening in your business.
00:17:59
Speaker
So that's one big breakthrough.
00:18:01
Speaker
The next big breakthrough is aggregating all that data and getting that into a data platform or some sort of aggregated solution where you can get real-time visibility into what's happening at any nook and cranny in your business in a moment's notice.
00:18:14
Speaker
That is a big breakthrough that I would say almost every customer we've worked with, that is one of those huge aha moments where we're now operating with a competitive advantage.
00:18:23
Speaker
Before, there was a five to 10 margin of error in every decision we made.
00:18:27
Speaker
We have a lot more precision now.
00:18:29
Speaker
And then the next big breakthrough from that is now that you've got your visibility into what's actually happening, implementing and figuring out and testing and trying where AI can best improve your business can now be an iterative and data-driven decision-making process to see what's working because you've got that visibility scoreboard.
00:18:47
Speaker
So you really get into that flywheel of optimization.
00:18:50
Speaker
I think about it in stages in terms of what different companies, what sort of benefits are available to different companies depending on where they are.
00:18:59
Speaker
Excellent.
00:19:00
Speaker
Now, if you'd like to hear more from David on the topics discussed in this Feed Strategy Chat, please consider attending the Feed Mill of the Future Conference, www.feedmillofthefuture.com.
00:19:12
Speaker
Thanks again, David, and thanks to you for tuning in.
00:19:16
Speaker
Thank you.