Walid Ali, artificial intelligence in manufacturing, Microsoft, joins Peggy to talk about sustainability and its importance now and into the future. They discuss how AI (artificial intelligence) is changing in business and what makes it so essential now and how AI technology can help us achieve greater sustainability along with the adoption rate to enable sustainability initiatives. He provides advice to organizations looking to achieve greater sustainability, how different generations help achieve these goals, and adds insight into what we all can do to come together to bring greater sustainability to fruition and reskilling, retooling, and retraining of employees.

Below is an excerpt from the interview. To hear the entire interview on The Peggy Smedley Show, visit www.peggysmedleyshow.com, and select 12/22/2020 from the archives.

Peggy Smedley: When we talk about artificial intelligence and what’s happening in sustainability, we need to get companies thinking about what they need to be doing in manufacturing and in all of this advanced technology. What’s your take on what we need to be thinking about?

Walid Ali: I think you need to be thinking about the immediate opportunities that the manufacturing space has been exposed to. And sometimes it’s a blessing in disguise. Sometimes a disruption in the whole ecosystem has taken place because of a pandemic or because of an introduction of new technology. Nowadays, we are in the realm of both, where the pandemic has dictated a specific desire of agility and production of quality at scale at lower costs with remote workers as an anecdote of today’s industry. In addition to all of that, the introduction of artificial intelligence and machine learning has really matured in many aspects that are resulting in the need for that expedited path for all manufacturers. So, in summary, it’s an opportunity and its a blessing in disguise where we are today with all the nudges that we’re getting from the microsystem pressure points.

Smedley: Do manufacturers truly know why it’s so important to really leverage? You know we’ve been talking about the IoT (Internet of Things); we’ve been talking about why you have to go to the cloud. But do we understand when we take that next level, when we say why we’re moving from IoT to AI (artificial intelligence), why it’s so important right now? Because you just said, we’ve got a pandemic and it’s exponentially nudged us, like you just said, but it’s almost given us something that I don’t know that manufacturers really recognized in some ways that that nudge is almost a kick in the butt more than just a nudge sometimes.

Ali: Yeah. You put it very eloquently, but I agree with you. You know it’s interesting because when you have your head down trying to produce more at lower costs as a microeconomic pressure in the midst of all of these conditions, you have the tendency to keep on doing the same thing and try to optimize it. While sometimes it’s easier to look for a new innovative path to drive this new technology adoption and deployments at scale. And you’re spot on, I think there is a need for being comfortable with the uncomfortable, being aware that the adoption of disruption even though it might be a little bit of a change of the norm at the beginning would pay dividends long-term. So I agree with you, I think it’s a journey of continuous learning for all manufacturers.

Smedley: And I think it’s a great expression you talk about the comfortable with the uncomfortable, because we always have said for a very long time, I mean, for the last 10 years when we made that move from M2M to IoT and now we’re seeing AI because we have to look at the data. So manufacturers have to discover what’s the most important information, and in this changing business world they have to understand what’s the most critical information to make the right decisions. Because you described it right in the beginning, you’ve got all these remote workers and if you’re not looking at information right now, the bad guys are looking at your information and they’re trying to figure out how to steal it, to make it really difficult for you. So, you have to look at information and say, “How do I leverage the most information because I don’t have my workers all working together, they’re working remotely.” So you’ve got to know how to make the best enterprise decisions. So you’ve got to do more with less, but do the best you can to be most successful, correct?

Ali: Exactly. Spot on. And I think that’s the challenge with the explosion of data. … So with all of these explosive data streams and how to make the best out of them, what is the best tool to go… First, what makes sense versus what doesn’t. Then, what the AI tools and the AI paradigm and AI platforms would offer the manufacturers. If we even think we can do this in an non-automated way, the cost and the time and also the feasibility of being able to do that successfully is almost impossible to attain in today’s manufacturing world. So it’s spot on. It adds to the value of AI and the need to adapt it even more rapidly than before.

Smedley: How are we going to take all these initiatives that you talk about right now when we look at sensors? How are we going to get this information that we want right now, quicker? To give us the data that we want, because we’re not really sure what we don’t know…. How are we going to get that to them to understand what they need to be doing?

Ali: Right. And it’s very funny because we usually have the tendency to try to create it all, make it all in-house. But in reality, being able to integrate with the rest of the ecosystem with whatever’s been done in the past is really where the solution lies. If I’m running my own floor shop activities and my own platform, if I think of delivering my goods with products being produced optimally at the best quality, I would have to rely on the right ecosystem, transportation ecosystem, to get my goods from point A to point B. I would have to rely I on the right customer understanding, customer expectation, customer forecast.

So you start seeing different aspects on how to tie this to my own vendors, my supply material, my energy sources to build the right supply chain paradigm. So you start seeing a few of these ecosystems that need to get coupled together versus invented all in house and fundamentally partnering with the right technology partner to help the manufacturers take them into that space. And it’s something we pride ourselves in at Microsoft, but as well as many of our partners. So it is really that journey where manufacturers will need to align and partner with technology partners to take them into the next realm of maturity and execution.

Smedley: When we talk about that supply chain, we talk about that ecosystem that you’re talking about right now, it’s everything, because right now we learned about it. We talk about this all the time, just in what we’ve seen right now. If you don’t, manufacturers don’t have the right supply chain, you’re going to be missing things that you need to complete everything from a manufacturing execution standpoint, whether it’s just in time, whatever it might be, are these things now going forward when we look at AI initiatives, when we look at what we have to do from a sustainability circularity standpoint, how our partner’s going to be so critical in achieving that when we think about what’s happening with our ecosystems environmentally? How are we going to do that? I mean, because that’s the bigger next step we have to think about when we think about how AI is going to contribute, not from just domestically but globally.

Ali: Absolutely. And that’s where you start seeing, seeing the value of, for lack of description, doing the right thing sometimes it’s even cheaper than doing the wrong thing. And you said it right, the circular economy and coupling the value of sustainability in our thinking and our production and our acquisition of energy sources and only totalization of manufacturing floors, capacities, and build up, even controlling the temperatures and humidity and floor shop immediate conditions and tying them up with our supply chain or vendors and availability of products and producers, as it gets through our floor shop, you start seeing this complementary, economical impact of working with a sustainable mindset as we build our own thinking of the new industrial revolution capabilities. Tying them together, not only will be the right thing for the environment and our ecosystem, but also would be cheaper long-term for the cost of production of our products and the cost of acquisition of energy sources to produce them.

Smedley: The types of manufacturers we’re talking about right now, are we talking about the very large ones or do we have to start thinking about the small-to-medium-sized manufacturers right now that have to be thinking about how do they re-skill? How do they retool? How do they retrain their employees? When we come out of COVID, some of them are necessary manufacturers, they’ve got to keep working during all this time, this shelter in place. I don’t know if we’re still considering shelter in place, but everybody’s not working and they’re feeling the pressure of all of this. But we have to retrain, reskill, get the next generation excited about working in this industry, but there’s a whole advancement of tools and technologies coming in place that manufacturers have to get the right skilled workforce. So how are we doing that?

Ali: 100%. I think that’s a very good segue, the value and the importance of small businesses as compared to larger enterprises, in my opinion, it’s extremely unwise of us to assume one is less important than the other. The nature of manufacturer and the manufacturing ecosystem is heavily dependent on small businesses from an ecosystem perspective. So think of it as key enterprise players are playing the role of keystone partners and key pillars and the whole ecosystem. But in reality, the rest of the constellation evolves and keeps on moving based on the vitality of the small businesses and their ability to also integrate and adopt these new changes.

Do they have the same supply-chain problem that big enterprises do, for example? And the answer is yes, but they do have a different supply chain than what a bigger enterprise might have. And they need to be able to navigate it, secure it, maintain its resiliency, deliver against disruptions in that supply chain. And they need to do that because their exposure might be sometimes more critical or heavier than other enterprise, simply because the other enterprise will have more channels and there will be vendors at almost every single stage.

For smaller businesses, they might not have that. But to answer your question related to the scaling, we from, us at Microsoft, as well as many other key players in today’s industry from the large enterprise, we understand the value of having a strong and really vivid ecosystem, including the small businesses, we’re eager to partner, skill up, or small business partners. But I think also it goes both ways. We should have our small business partners taking an active role in reaching out to their enterprise partners, asking for the right skilling and working with us to skill them on what they need to address. Because simply, if we don’t reach that degree conversions together, the value from an enterprise perspective becomes very limited. In other words, we both benefit from improving and rejuvenating the whole ecosystem together.

Smedley: You made me think about something because I think sometimes we lose or there’s a disconnect because we assume that a tier-one supplier has to have technical advantages. But if we go down to tier two or tier three, if they don’t have those same technical advantages or knowledge, there is a disconnect between the supply chain and what it’s capable of doing. So doesn’t that entire collaboration supply-chain ecosystem need the same advantages so that we can build and deliver the products that are necessary because there are parts and supplies that need to be throughout that ecosystem?

Ali: Absolutely. Spot on. And then, I mean, even if a large enterprise is building the best computers in the world, they would rely somehow on manufacturing specific components that will come in for small businesses and being able to upgrade that whole ecosystem is key and driving the next disruption uniformly across the whole discipline; you’re spot on. And that’s exactly my point. Me saying, we all benefit from empowering the ecosystem with all the parties included, but it will also be unwise to say, this is enterprise, large enterprise’s responsibility. I do believe that goes both ways between large and small players in the ecosystem, the small players, I really encourage them to take an active role in reaching out to those larger enterprises. Partnering with them, us included at Microsoft, and we’ll be more than happy and eager to drive their next phase of maturity into this new ecosystem and workforce skilling, as needed.

Smedley: Now we’re getting into this new generation of needing to be—and we’ll go back to the sustainability and circularity concept of this—we have to think about what we’ve taken out of our environment, what we’ve taken out of now, the ecosystem, the natural ecosystem. So we need not only the ability to have good tier one, tier two suppliers, manufacturers, but we need a generation of people who understand how not just to keep this take, make, waste, but how we have to give back. We have to think about our carbon reduction and those kinds of things. Are we going to be starting to find a generation of people who understand that? And that’s a part of what AI can deliver in this?

Ali: Absolutely. And I think you are really raising the right point of tying AI and its impact on the production, the efficient production, the optimal production of today and tomorrow’s products, but also producing it in a sustainable fashion that will, would be beneficial to the environment. I would actually add on top of this, I will add that this production long-term, when we stop talking about reducing the carbon footprint, for example, associated with our products, naturally we start thinking of reducing the amount of energy utilize that gives this production. Naturally, we start the new thing or a fingerprint that is causing the pollution.

That will also eventually reduce our cost of production long-term when we do try to, when we come up with the right resources, when we build the right data center and put them at the right energy consumption level and utilize the natural sources available today for cooling versus relying on heavy air conditioning systems. I think you know at Microsoft, for example, we do have some data centers in the bottom of the oceans where we utilize the natural cooling that the environment is offering us instead of spending more carbon dioxide production to produce that desired cooling. So, as I’m telling you, as we get deeper into the right way of production, not only are we going to do the right thing for the environment, but we’ll also reduce the cost of production on our articles.

Smedley: So it seems to be, there’s a disconnect… We’re a society that just doesn’t change. Are we going to change our ways? And is there one thing you believe that needs to happen in order to get us moving in that right direction? What is that?

Ali: Yeah. I don’t think it’s an if. I think it’s a when. Bluntly, it’s happening already. Many of the big players, the major players in the manufacturing space have adopted sustainable execution path for their current and future production lines. In addition to this, the tie in AI, really the consumption of data and the right fashion has proven to reduce the cost of production significantly. So I look at it the other way around. I look at it as those who are not embracing sustainability and AI as key pillars for their production will end up not only on the wrong side of what our environment needs, but also on the wrong side of the bookkeeping and the cost gain value and their ability to be competitive long-term would be compromised.

Let me just say also differently at the very beginning, what would be this single ingredient that we should advocate for so that we’re capable of absorbing the value of innovation disruption and how to embrace it in the future? I would say it’s data. I think there is an explosion of data around us, everywhere, and data is going to be the most important currency and tying it to the right production paradigm would be key for these platforms and products’ success in the future.

With this comes different degrees of involvement in the technology and not everyone needs to be an expert in AI and what deep learning and neural networks and machine learning. And you don’t really have to have that, but you have to have enough fluency in the area of technology underneath it to your immediate discipline, then rely on your partners to walk you through that extra mile for them to provide the value that added together to your contribution, you would be able to reach their own need then. So it is really the data understanding the data around you and from your ecosystem and supply chain and being able to tie your own with the others, I think is key for the success in the coming year.

Smedley: We talk about, again, technology being a journey. Now we’ve added sustainability and AI onto all the other things we’ve done up to this point in manufacturing, where we’ve come from MES and ERP and all of these things that have been transitional during the years. Now, we’re looking at AI and sustainability being that next layer, transition we have to make. How do companies look at an ROI of this and they say, “How do I see it?” Because now we’re looking at environmental social governance and there’s going to be the one that you’re going to have to put all this together to say, “Look, this is the way we’re going to see.” And have to put some way of tracking. Is it going to be, you’re looking again at different departments, it’s going to have to run across the entire manufacturing operation, but where do you start to be able to kind of say, “We’re starting to see little improvements?”

Ali: Yeah. Start from your area of competence. I mean, that’s an excellent question. Always start for me of any of competence and rely on your partners for what they are driving in that area of expansion and development and innovation as well. So, for example, if I’m running my own discrete manufacturing, I am focused on the improvements, operations improvements, cost optimization, my supply chain for my vendors, and tying them into my products. But let’s not worry, if I’m responsible for my manufacturing in my factory, let’s worry less about what are the transportation or the logistics system disruptions models, and how they tie in, and relying on your partners to drive that for you in the right fashion. Then couple it and tie it to your own innovation. So it is really a simple divide and conquer and start with your own area of competency and build on it. And based on that, you’ll be able to achieve your objectives.

Smedley: So really if most manufacturers right now have a tech partner that they’ve trusted through the years who really understand and can show them how to interpret the data, they should continue to be following that same journey. This shouldn’t be a giant hiccup in the way they’re going about doing business. This should just help them along that path see consistent profitability in growth that they’ve been seeing if they’re doing it right.

Ali: Absolutely. And I’m going to tie it down a little bit further. Also, by then working together with the right partners. For example, if they are working with a cloud provider, like ourselves or Microsoft, but they will also be able to achieve their sustainability objectives simply by being able to consolidate the data centers and work because the issue with technology and AI and data analysis in general, it requires a big footprint of assets and servers and data centers, but consolidating them with the right cloud architecture and data analysis in the cloud reduces significantly the associated environment impact for running these massive workloads in a certain fashion versus in the cloud.

And while doing that, they would also be able to achieve their own sustainability targets that comes in as carbon credit or other aspects of reduction of course. Last, but not least, there is a journey for that maturity in AI in the data space. If every one of them, think of it this way, if everyone had their own water distribution versus relying on the utility company and if every one of us is trying to establish their own pipelining system to the rivers and the water sources, it becomes impossible to achieve versus us relying on the utility company. …

Smedley: The only thing that I would say from someone who’s been in manufacturing, has observed it for many, many years. This is what I think is kind of the difference. And you can correct me if I’m wrong. We now have a new generation. That’s going to be excited because they get passionate about things they like, and now we’re improving the environment again. So, if you couple this younger generation that feels that they can take on a cause and the cause is cleaning up the mess that we’ve created since the industrial revolution. I think we can add something even more exciting to what we could do in manufacturing.

Ali: 100%. It definitely aligns with our millennial generations and their thinking of what they want to do with what comes next for their journey in the workforce. But it also ties them up. I mean, in today’s industry, all manufacturers, they have their own interface points with technology, personal, and others, and tying it together and integrating it in the right fashion not only will have them kind of continue their journey with a new technology that they are enjoying their personal space, but it gets them to do it in their business space as well. But it will also tie them to all the environmental and the societal trends that many of our new generations feel affiliated with and have a strong opinion about playing a positive role.