SAP: supply chain lessons learned from Fyre Festival
Richard Howells, Vice President of Solution Management at Digital Supply Chain, SAP discusses the logistical challenges facing the organisers of Fyre Festival, and the lessons to be learned from its failure.
In April 2017, the attention of the world turned to the island of Great Exuma in the Bahamas, where a logistical tragedy of spectacular proportions was unfolding. Billed as a luxury, immersive music festival, held over two “transformative” weekends on the “boundaries of the impossible,” Fyre Festival promised to be the ultimate getaway experience on a private island once owned by Pablo Escobar. Intended as a promotional event for co-founder Billy McFarland’s celebrity booking company, Fyre Festival boasted an A-List lineup including: Pusha T, Blink-182, Major Lazer, Disclosure, Migos and Lil Yachty. A promotional video filled with Instagram influencers, speedboats and (a true masterstroke) adorable baby pigs. Tickets sold for between US$500 and $1,500, with VIP packages costing as much as $12,000 for private airfare, luxury accommodation and gourmet meals prepared by celebrity chefs, including Bahamian sushi and roast pig.
To the horror of the several thousand Instagram influencers, paying guests and local Bahamians, the festival weekend unfolded into one of the most dramatic and highly-publicised calamities in recent memory. Pablo Escobar’s private island turned out to be a strip of land on Great Exuma, in spitting distance of a Sandals resort; the luxury accommodation turned out to be a waterlogged shanty town of repurposed hurricane tents; and the gourmet food distributed to guests took the form of a cheese sandwich, which became the most iconic social media post of the scandal. Social media exploded, Instagram influencers were scrutinised for failing to disclose their role as paid advertisers for the festival, co-founder and music producer Ja Rule tweeted that Fyre Festival "was NOT A SCAM" and "NOT MY FAULT", McFarland, Fyre’s CEO, was fined $26mn and sentenced to six years in prison, and that, it seemed, was that.
Following the release of two documentaries about the event - Fyre by Netflix and Fyre Fraud by Hulu - in January, 2019, attention has returned to Fyre Festival, which has become synonymous with disaster and unmet expectations. Nevertheless, in February, Ja Rule revealed to TMZ that he is working on the launch of a new app-driven booking service (which has been noted for its similarities to McFarland’s Fyre service) Iconn, and is planning a festival to launch the service. The mogul told TMZ that “in the middle of chaos, there’s opportunity.”
In order to better understand the logistical complexities faced by the organisers of Fyre Festival, and how an organisation looking to replicate the experience (without brand-destroying backlash) could proceed, we spoke with Richard Howells, Vice President of Solution Management at Digital Supply Chain, SAP. “I've been working for SAP for 15 years. I work in the digital supply chain, which includes the entire vertical; the full life cycle of a product or asset from design to deployment, including the sustainability element,” Howells says. He has worked in the supply chain and manufacturing space for over 25 years and is currently focused on driving the market direction and positioning of SAP’s Supply Chain Management and IOT solutions. Howells’ philosophy at SAP is that customer experience is growing in importance as multiple verticals move away from one-time sales towards a service model. “It's not just the automotive industry where you're leasing cars. Everything can be leased. If you don't go to that point, you're still trying to design smarter products to provide a better customer service,” Howells says. “It's just a different way of engaging with customers, providing a better customer experience and differentiating yourself from the competition. It's what millennials and Gen Z have come to expect.”
Turning to Fyre Festival, an event which, according to Howells, failed to meet the expectations of its millennial target audience, he explains that the event was by no means doomed to failure, and could have been salvaged by better organisation and understanding of its supply chain. “Many of the problems could have been overcome,” he insists. “The fact that they chose a remote island, which was meant to be the attraction, was a major issue. They didn't think of the logistics of actually executing an event on that island where there was zero infrastructure. The plan was to import absolutely everything, from portable toilets to water, which was a logistical nightmare. Then they moved it to a bigger island, and it happened to be the same week as the biggest event of the year on that island, their regatta.” Poor planning and understanding of the task undertaken are the first major issues that Howells identifies. “The reality is that they didn't realise how big a job it was to plan this type of event. They announced it five months in advance and to execute an event like this on the mainland is a 12-month exercise. They had no experience. You've got to have accommodation for guests, staff and entertainment, but you've got to plan for the right amount of accommodation. You've got to plan for the right amount of food, water and facilities, such as toilets, that need to be imported. You can then work out a schedule of when these things need to be ordered and what they're going to cost,” Howells explains. “It's really a budgeting exercise based on demand, to work out the supplies required, in order to plan where that supply comes from, and when it needs to be at the specific venue.”
With his decades of experience in the space, Howells acknowledges that the best laid plans often go awry. “We plan in the perfect world but we execute in the real world, and in the real world, everything doesn't go according to plan. My father always used to tell me that if you fail to plan, plan to fail,” he says. In order to counteract the unpredictability, Howells counsels both intensive planning and adaptability. For both of those strategies to be executed, he cautions, visibility along the supply chain is essential. “It's having the ability to see that something has affected the plan, and having the ability to adjust, as well as the visibility across your supply chain and business to detect or predict obstacles.” He also notes that, throughout the planning of Fyre Festival “there was very little leveraging of technology. Everything seemed to be conducted via email. There was none of the necessary visibility.” SAP’s integrated business tools, Howells is certain, could have alleviated a great deal of the logistical problems with the festival. “They’d need an integrated business planning tool, to be able to plan and project what is required, when it's required, and be able to replan as things change.”
Looking to the future, Howells cautions “social media gives companies the ability to create a perception of being much bigger, organized or capable than they are in some cases. You have to have processes that deliver on your promises. That’s the key. You will get found out if you cannot deliver what the customer is expecting.” Whether in the event planning space, digital marketing, or any other vertical, Howells is hopeful that all event organisers and logistics coordinators, at every point on the supply chain, have learned the lessons of Fyre Festival: plan effectively, leverage technology, budget transparently and – perhaps most importantly – don’t promise the world and deliver a cheese sandwich in a hurricane tent.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”