Chevron, Ericsson, Levi’s on the Power of Connectivity
I'll start by asking you what does it mean when you think about that when you think about the possibilities with this kind of technology. How how does that affect how you do your job and just bring everyone here into your world. Sure. Hi guys. I'm sure if you're familiar with our brands if not we'll get to that soon. But to the question of connection I think for a company like La ISE has been around for a hundred sixty nine years. This is critical to our future. Let's start
with that. It's the way consumers shop today. They have a you know they want a digital experience. They want to pay digitally. It's how our internal employees want to work in especially the millennials and and the Zen zis and other stakeholders is also issues is important to us. It's important to drive sustainable practices across. And so for us it's both in a push from the top as well as need from the from the bottom. And it's really starts with that. You know we've
added technology expertise at the board level. The CEO talks about this. I talk about the CIO report sent to me for the last 15 years. I've had the CEO report into me. It allows me as the CFO to help allocate resources across the board. And I think the pandemic has made a huge difference as the accelerated digital transformation in a big way and has allowed us to differentiate ourselves and compete a lot better. I think you know my my friends we've talk about it. But ensuring we're investing in technology just not because it's the latest shiny object but because it is connected to a strategy and drives an outcome is critical. And I think you know the sweet sweet sweet sweet plays a big role in ensuring that. Well that's a great great question. The first reflection I have
is Covid thank God that didn't happen 15 years ago. It would be a beam. Connectivity enabled us to think all of us to actually continue over 80 percent of Ericsson folks who went home that day. We kept everything going. Didn't miss many delivers. Innovation continued. Right. So it's it's like it has really enabled business continue with an old sort of way. Another example from our home turf this is manufacturing. We are building our newest Tyco have built our newest factory here in the U.S. and in Texas.
And Ford connected with five due to have these robots and these actuators and everything and sensors connected to the 5G an automated with a meaning that we can onshore. All of a sudden we can't have production of U.S. a good good economy. Right. Because automation can can shore. This is the first time actually since two days that anybody has volume radio production in the US because of these technology enablement. Right. So those are two things. And the last thing which is maybe closest to my heart is sort of what innovation we can do on top about the order to have
them be coming into kind of method over something that my my pet project at our lab and something Clara ISE to enable virtual reality and augmented reality with very lightweight glasses having all the processing in the cloud. Well done. Of course you have to have very very efficient network low latency network because then you move your head. The picture has to come mostly formations to what do you do. Yeah. You don't get sick as a good area. Dreaded the pictures to go back within 10 to milliseconds or so. And that is that's state of the art. Now we are doing that every day with different partners in the lab. That's just one example of how connectivity changes other industries and enables completely new use cases that we didn't even think about a few years ago. Yeah. So our connectivity journey really is so closely intertwined and driven by Chevron's overall core mission to provide more affordable reliable and ever cleaner energy solutions around the world. We're one hundred and forty year old company where we have a longstanding history of innovation and
technology because if you think about where we're located right we operate in locations and a variety of geographies that are often remote that are undeveloped where there's no technology infrastructure whatsoever. And so some of some of found some examples of those places are things like are are deep water wells offshore in Nigeria or the Gulf of Mexico. The Permian Basin in Midland Texas. And for me specifically it's our ships that sail around the world across our oceans. And so in order for us to do and execute on our value chain to be able to explore produce transport as well as refine our energy products we've had to really invest in connectivity and leaning into emerging technology in order to operate both reliably and safely. Take us behind the scenes of a Chevron ship. How is the ship been changed in the last few years to have that
connectivity so that it can be more efficient so that you can deal with some of the pressures of the supply chain. What what's different now. So it's a really fascinating business if you kind of think about what the maritime industry is like. We all take for granted what it's like to work in an office or what you call a shore based environment. You can't really emulate that type of technology environment on a ship.
As John mentioned. Right sometimes we have issues of latency. We have bandwidth issues. And sometimes they're just basic coverage issues. But in spite of that we're continuing to optimize the network that we do utilize. And we're still trying to take advantage of emerging technology. The advancements in connectivity as most of us know has really
driven a convergence between information technology and operational technology that's allowed it to influence physical operational assets more than we've ever had before. And so as a consequence we're able to take advantage of things like real time monitoring. We're able to automate critical processes more strategically. And we're also able to find the scene that you're talking about like the actual mechanics of the ship. You're talking about the. Right. So I guess a good example would be one of the programs that we're we're maturing and developing is something called the connected vessel. We're able to take data from various systems across our ship from various pieces of equipment things like our diesel engine things like our power generators are propellers. And having access and visibility to
that information really guides us in terms of some of the decisions we made around operational efficiency cost efficiency how we do our inventory on our ships. But also I think more importantly it's also allowed us to be able to understand and view fuel consumption. It's allowed us to understand how we manage our speed as well as even do things like anticipate congestion at ports and birth so that as we understand those various factors it allows us to actually have a lower carbon footprint. In addition to being able to operate more efficiently. So interesting for me you also work in an industry that is historical right apparel like maritime workers or base environment. And what is what has been what are the growing pains of moving your organization culturally in that direction. Sure. You know it's taking some of the old habits that you've grown up with. And converting them to new habits. Okay so let me give an
example. So the gene I'm reading this is probably a lot darker when it's first created. And so Harmeet wants something that's a little bit more faded. Sarah may want something with which has what we call holds in distress. So what is a traditional way of doing this. And this industrial done for years. Do we. We came and pioneered the new technology. So most of our manufacturers are overseas. So you'd have folks who would take some sandpaper and they'd fed
the gene. You'd have folks who create the hoards of distress. So we it OK. Now that requires chemicals. Not good for you. And it takes a lot longer. And in this industry you've got to think of trends a year later. So you know we're making stuff already down the road because our designers are thinking through what is going to sell a year later. So what we came up with is using lasers with algorithms that are designed you know my I.T. team help you know design some algorithms. So what we did was we said OK if it's darker and you want to fade this can use the laser machine to fade it. And if he had to distress it could the laser do it for you. And.
And but the idea was let's reduce you know for DAX for Magnet which is not good for you. That's how the ADA came across. And so we started with that. We researched it. We came up with an algorithm that could do it. So if Sarah wants to have a different kind of war look and feel she can go and say oh an eye patch this is what I like that is fed through an algorithm into the laser machine. And the product is in 20 in this. This happens 920 in 90 seconds versus 20 minutes. And what we can do is rather than think about a year ahead we bring the blanks in to D.C. is now in the US. And if there's a
trend that's happening we're able to quickly react to the trend and create this machine. The other good thing about it is when we started doing this is we open it to the consumers and consumers want to design and customize their own product. And suddenly using the data we realize people are trending towards a certain style and say OK that is the style it. So let's start
gravitating to it. So that's not that needed a cultural transformation. Designers are not used to this. Our manufacturers are not used to it. So we had actually spend six to nine months bringing people across and saying we'll give folks this is a new way of doing things. This is the benefit. OK. And and got people across the board. But it had to start at the top. You had to invest in laser machine and then you had to take a period of time to convert you know customers that large retailers are windows overseas. In ISE. It actually is a major change and culturally takes a long time.
And then you have to have people working in close proximity during a pandemic. You mentioned that that has been so critical for this for this last two years to have this connectivity to have these processes in place. I've heard executives say to me that the world has transformed many tigers faster than it would have because of the pandemic. I don't know if you agree with that. Do you feel like we've accelerated an adoption of new connectivity or you know does that mean there's a slowdown ahead or does that mean that people will continue to accelerate their adoption of such technology. Well it certainly helped a lot
these two years in terms of the adoption of everything from zoom to teams to mobile working remotely and mobile all of that so much. Most of that will stay. And most of that maturity will of course continue to push ahead and be we are investing ourself of course but we are sort of the producer of connectivity. That's that's our business. And then we are of course a consumer of connectivity as well. So to to drive our own innovation within our own business. So I said as a
producer of connectivity we see that the speed of the need for more and more a faster and faster rollout of technology is increasing all the time. Five days rolled out much faster than 4G was for do much faster than the three of us. And that's of course good for business. And we kept investing in our technical leadership to take advantage of that. But we also made use of that technology in our own operations. Right. So for example in our managed services going from a very manual driven operations
to much more automated and having connection points everywhere in our installations made our efficiency go up tremendously. So I think that the scene throughout all businesses what you're telling here is telling the same story. I must just go back to it. Yeah I must just comment here OK. Hundred and seventy nine hundred and forty years and 46 years. This is a basic panel of
companies that have innovated themselves throughout the generations. I think it's pretty cool. And that's that's also for the big transition out. Every industry would have to do exactly this. Now in this digitization journey it's it's a very cool experience. I'm curious what are our table made process. We were just chatting before before this panel. As you look at the market right now as you look at the way the way FTSE are trending the way people are worried about inflation they're worried about the supply chain. How do you still make those choices to invest in the future. What is the most important place to put your money right now. And how do you balance that against those pressures of growing the business as it is. I mean it's a good question for our CFO to tackle first actually. Sure sure. No it's a good question. We
had a mess today last last week in New York. And you know we laid off five year targets with strategies. You know you have to think long term. First Ebola thing long term. Don't worry about. You have to worry about the next quarter. But think long term. I'd say the way we think about allocating resources. But this capital of people it's about look what's the outcome you're
trying to drive. But it's also about agility. One of the things that that really made a difference in the pandemic for us is you know we're not big an organization that's been around for a long time. We should take a time to get things done. You know we should come up with an idea tested make it perfect then tested further and then launch it. You know it. A dig of the year two years. But I think the pandemic changed a lot. You know my phrase is let perfection not be the enemy of good. And it is starting from scratch. That's in your DNA. If you've been here for a long time you want to be perfect. And so
what would we have tried to do and whether we have you know as we've learned shipping from store you know relying on the disease or you can buy online and pick up and distill those things would take us a year or two you know delaying all the pipes and get everything perfect. That makes you know we can do it a lot faster. So I think agility is something that we've incorporated not DNA. A lot of folks I'm sure folks here have made that difference. But what I would say is if you have to allocate capital and resources. Think longer term and drive outcomes for. I think that's the big one. And we just talked about it and I enlisted to do with five year targets. Okay. And I think you know our viewers is get. And Janet you know there is another component to this which is you want to think about the even bigger picture in your company. You want to think about the environment you want to think about governance. You want to think about adopting technology in a way that that is
sustainable. How do how does Chevron's transformation in that sense dovetail with your CAC adoption. You talked about emissions because you can you can track shipping in a more efficient way and fuel efficiency. How do you how do you invest in that going forward. So I actually think it's quite complementary. One of the commitments that our CEO made to our shareholders and it's a strategy we have is lower carbon higher return. And so operational efficiency. Right. How we operate in a manner that really prevents loss of production that keeps our up to keep
keeps producing you know as well as some of the technologies that we're utilizing to really drive that lower calming sort of initiative. Those are things that are now so embedded in the work that we do. And similar to what he said. Right. We use a lot of we have a lot of capital discipline where any investment really has to have a clear business value and it has to align with our strategies and it has to be something that really supports what we do as an energy company. And so if you think about our remit right as a company economy they want more affordable fuel. Right. And energy visit. Countries want more reliable energy. Society wants cleaner energy. And so if we're looking at Shery Ahn shipping for example as we are trying to operate more efficiently and in a more lower carbon matter some of the I think consequences that address some of the broader issues are things like the reduction in transportation costs. They are
things like lower CO2 emissions. Right. So just it's just it's really as straightforward as that sounds. Trying to align to our strategy and the tactical things we do within our organization are just very complementary to the two questions here. Thank you all for your question. A power edge technologies being leveraged to balance cloud compute power and latency may be a good question for you. Yeah. Well there are two things with ABS right. Either. Either you want to move things from your center cloud to LEDs or you might want to move things from your device to to the edge or into the cloud. But I talked about VR processing is about the latter right. Offloading things from the device. You can do more but it can be that you need candles have
everything centralized also to move things out. So you have to show more and that lower latency from from the user to the actual processing of whatever this the interference of your ISE I didn't know was not helping the helping the. Out in the region. So edge is separate but but to me and just like it's it's one of the component edge plus connectivity is sort of one thing together right. You don't if you don't have low latency over the course of the network it doesn't help with that. So you sort of need to do both. And in the middle of the ocean how do you solve that issue. So we sometimes joke that you
know of our owned and operated ships. We have 30 floating data centers. Right. But we have been also exploring technology that allows us to think when we are close enough to a network and we're not experiencing some of that network connectivity distress. We have a way to make sure that the information right continues to flow. So we we also as you mentioned use a balance of both.
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