The Digital Supply Chain podcast

Digitizing the global grain supply chain - a chat with Naeem Zafar, co-founder, CEO of Telesense

March 22, 2021 Tom Raftery / Naeem Zafar Season 1 Episode 117
The Digital Supply Chain podcast
Digitizing the global grain supply chain - a chat with Naeem Zafar, co-founder, CEO of Telesense
Show Notes Transcript

We don't often think about the global food supply chain - it is just there, invisibly making sure we can get food on our table in good condition.

To give you an idea of some of the ways technology is helping this hugely important supply chain I invited Naeem Zafar, CEO & Co-Founder of TeleSense. Naeem is on a mission to digitise the global grain supply chain. Why? listen to the podcast to find out! You can also check out his personal website here.

We had an excellent conversation and, as is often the case, I learned loads, I hope you do too...

If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).

To learn more about how Industry 4.0 technologies can help your organisation read the 2020 global research study 'The Power of change from Industry 4.0 in manufacturing' (https://www.sap.com/cmp/dg/industry4-manufacturing/index.html)

And if you want to know more about any of SAP's Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

Naeem Zafar:

So point is a lesson for entrepreneurs is you don't know what's ahead. I have no idea any of these things existed. But if you're curious, and you're listening, and you're flexible, and you're creative, there's so much you can do.

Tom Raftery:

Good morning, good afternoon or good evening wherever you are in the world. This is the digital supply chain podcast, the number one podcast focusing on the digitization of supply chain. And I'm your host, global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today I have my special guest name, name, would you like to introduce yourself?

Naeem Zafar:

Sure. I'm Naeem Zafar. I was born in Pakistan came to US to study electrical engineering. I got degrees from Brown University and then the University of Minnesota. And so I've lived here ever since I moved to Silicon Valley about 2530 years ago. And after working for a large company for Honeywell for five years, started my first company and then discovered the world of entrepreneurship. And Telesense is my seventh startup, which we started about five, six years ago. I'm also a professor, I teach entrepreneurship and innovation at universities like University of California, Berkeley, and northeastern and Brown and written a few books on this topic.

Tom Raftery:

Okay, and the Telesense is why I want you to come under the podcast today. So can we have a quick chat about that? Tell me what it is, why it is? What problem is it solving?

Naeem Zafar:

So you came to realize that growers farmers all over the world, you know that they're on a tight business, profit is very thin. And they're subject to all kinds of environmental conditions, weather conditions and bugs and spoilage. And very few of them really make a good living. Why is that? An answer is access to data is democratization of data, if you knew that this pile of grain you harvested will be okay, for next 96 days, you may make a different decision than sell to the first broker who shows up and wants to buy it for not so attractive price. Since you don't know any better is okay, I guess I better take some money now then risk it. So you take it. The question is can we provide data to people who are growers as well as in the supply chain so they can make smarter decisions and eke out a bit more profit or minimize the losses? So that is the whole big concept behind telepresence? We can get into that how we do it, but that's the big picture.

Tom Raftery:

Okay and is it mostly farmers or your end customer are do you have other people in that value chain

Naeem Zafar:

so, we are first decided to focus strictly on post harvest grain. But the technology is applicable broadly to anything which perishable so but there's a plenty of problem in post harvest grain, whether it is coin or we are canola or in some other things like even potatoes who do have spoilage stored for a long time. So it's growers like farmers is people who are grain handlers is the companies which large company and cooperatives who hold on to the grain and then try to find a market for them all the way to the trading companies like Cargill, ADM Bundy, to anybody in the grain supply chain. By the time you take it out of the ground harvested by the time it's sold to a tofu maker in Tokyo, or a mill in Milwaukee, to make flour the whole supply chain is impacted. So as a grain in storage, grain and transport,

Tom Raftery:

okay. And you mentioned it could apply to any craft not just grain. So are you focusing just on grain because pardon the terrible pun here, it was the low hanging fruit.

Naeem Zafar:

Now, it well a couple of things. A one thing I've learned having done multiple startups, most startups die of indigestion, not starvation. So you have to pick a problem to solve and become very good at it and trying to solve all the problems which look so juicy and attractive. I made that mistake myself. It's not that we made that mistake, and it's very tempting. And people knock on your door and you have a solution and you want to do it for other things like wood chips, same problem, you know, slightly different supply chain but so it has to tempt us to to really focus on low hanging fruit which is, you know, half a dozen crops which have a $13 billion Opportunity worldwide. Just focus on that. But the second thing is that this thing, some country's economy depends on agriculture is huge, the numbers are big. And but we found that competitive landscape for us was very attractive. I put agriculture in three buckets. One is before you plant that all kinds of companies trying to figure out their soil analysis, where weather drones, you know what to plant where to plant, we don't do that. The second bucket is once you plant about plant nutrition, disease avoidance genetics, will maximisation bunch of companies do that. We're not in there. The third bucket is once you harvest. And the my favorite sentence is, grain never improves in quality, once harvested. The question is, how long will it be before it goes downhill? When does he number two yellow corn? Because number three yellow corn, you want to know. And we focused on that third bucket. And we found out there was hardly any company addressing it. There were a few companies with very arcane technology, mostly making art deco equipment for agriculture. Yeah, they have some products, there are a couple of small startups, which are heavily underfunded, and did not have the Silicon Valley DNA. So we found a place where we think we can thrive. And so we put all our energy behind that error.

Tom Raftery:

Okay, and but I mean, this, I think you've said is your seventh startup. And before that you were in Honeywell, and Honeywell are not, you know, a big name in agriculture, per se. You know? So why why the field of agriculture? Did your previous six leads to this? or How did you end up there?

Naeem Zafar:

No, that did not. And there was no connection. The point was, if you look at the broad picture, I think Marc Andreessen said that the guy who wrote the browser Netscape software is eating the world. So one by one, you see some industries touched by advanced software and being transformed. On the top of my list is semiconductor manufacturing, extremely advanced, extremely automated, extremely sophisticated, then you've seen software and advanced technology, make an impact on e commerce, huge, retail, tremendous. You see their impact in medical, not all the way but at least half a lot of interesting stuff going on the couple of industries, which have been the least touched by technology, construction and agriculture. So they the time was right, that they will be touched by agriculture and construction with advanced technology, and good things will come out of it. Because there's so much inefficiencies which could be addressed. So we, I just happened to see this and happen to know that Internet of Things, IoT will be a big thing when asked me to Oracle, and I was looking for the right use case. If this was not the first use case, I this is my fourth use case, the first three use cases I tried and for reason I can explain, but not as juicy as this one. Okay.

Tom Raftery:

And you said we could talk about the technology. So let's talk about the technology. I mean, you mentioned in passing IoT there, so tell me about it. I mean, how, how can you tell a farmer? No, don't sell the grain just yet. It's still good for another x days, weeks, whatever it is, how do you do all that?

Naeem Zafar:

So the grain is a living thing. It's living breathing thing, and it evolves. So it's how it is stored? What's the moisture level when you store it? What's the aeration system? If you have one? Did you have to dry it? What temperature is being stored? That type of storage facility, all those things impact the quality of the grain. So if you have, when you harvest corn, for example, we typically harvesting of 28% moisture. By the time you move it into storage, it could be 20% 22%. At that moisture level, if you're storing at, let's say 2930 degrees centigrade, or 85 degrees Fahrenheit, you have about a week before bad things will happen like mold. Okay, so I drive down to less than 17% 16%, you may have a month you drive down to 14% you have a year before bad things may happen. But during the storage cycle in the bin, whether it's constantly changing based on what's happening outside. So this is a constant struggle to maintain an optimal condition. So when do you turn on the fans? Is it raining outside? Maybe I should not turn on the fans. What's the weather forecast? Was there any pest? What? How much foreign material was there coming off the harvest? How many broken kernel increases the spoilage ratio? Because there are more exposed surface area? Yeah, so got to know that too. So my point is that about me, there may be dozen factors. So if we can using sensors detect half them, for all of them, then we can compute equation, we can tell you what is likely to happen. And with machine learning, we begin to realize over time, what can happen. Remember, each storage facility has a unique signature, a thermal profile, you have these vertical means one facing the south south Southern sun. And then one is in the shadow one is the oak tree, they were going to run at a different temperature, one even has a small leak from the sea roof. Okay, that's going to easily uniques, this thermal signature, is it possible over the years, we can memorize thermal signature of each bin and apply that to make a unique and specific prediction about each bin? theoretically possible, hard to do. But that's what we're attempting to.

Tom Raftery:

Okay, and do those bins and asking purely out of ignorance on my part here, do those bins have different profiles at different altitudes as well? When I say altitude, I mean, you know, some of those grain silos are quite tall. So I imagine that at various heights, within that silo, you'd have different temperatures, for example, in different humidities as well. Now,

Naeem Zafar:

if you don't have aeration, that's true, but many of them have big fans pumping here, so that you can then dry the grain of the green. So as green air moves through the green, a lot of it is neutralized, but yet still you can have clumps of mold, which can change the air supply and air flow and you can have a hotspot. So what happens is with a hotspot development, biological activity gets hotter and hotter and hotter. And sometimes combustion happens, you see the silos catch fire or explosion granted again, yeah, exploded. Yeah. And grain often is not just stored in silos. There's also ground piles, bunkers. There's a tubes, which could be, you know, three, four meter in diameter and 100 to 200 meters in length. So this is like football field long. And you can see that one time used temporary is very, very popular in Brazil, Argentina, and parts of United States now, Russia two, and then the then of course, these are the different. So you need a different way to monitor each different characteristics. Then you have transport of grain in barges and rail cars, yet a different problem. So that's a very popular use case for us is barge transport. Because barges ideal, you know, there's your one river, there's a huge delta between the temperature and humidity of the grain and the river. Bad things happen all the time.

Tom Raftery:

Okay, so do I mean, I'm not familiar with many places in the US that have barges? So is that is that a more something that happens in Europe? Or am I just completely ignorant and there are lots of barges in the US? Or where where does that operate out of?

Naeem Zafar:

Yeah, you bring up one of my favorite topics, which is if you allow me slight divergence. Sure. So interesting topic is what makes America great country. It's not all this thing about you know, democratic principles and blah, blah forgot all that is naturally blessed with the best geographies of any place in the world. It has the most complete river system. There's no place in America, which is more than 300 miles away from a river, and they're all connected in a way, it has no way to transport a ton. per ton per mile. The cost by river is 17 cents, while with a truck is $2.42. The cheapest federal transport is river in America with the Mississippi River and all the river feeding it is the best transport mechanism in the world. That's what gives America unusual and unfair advantage, which no other country has the total number of navigable river and I'm defining navigable when you have nine feet of track three meters, nine months out of the year. So Volga frozen half the fun. Forget that. No good. So with that definition, America has 14,000 miles of navigable River. If you include the channels across the east and west coast, 17,000 miles, the whole Middle East 120 miles. So this is huge. So you should mention that the Mississippi carries 13,000 barges up and down biggest transport grain and many other goods in the world.

Tom Raftery:

I'm learning something because it's great. superbe I did not know that. So what kind of things? Are you sensing with your sensors? temperature and humidity I'm hearing are two of the big ones. What else?

Naeem Zafar:

carbon dioxide. Because if you have a pest infestation, the first thing you do is carbon dioxide level changing. So the idea came from realizing there people were using in the conference room, co2 sensor to know, is anybody in that comfort zone? Should I turn off the energy? Because before televisions green, I was working on energy. Okay, so this idea, okay, so if there are 10 people in the room, the co2 level is going to rise from 400 ppm to 600 700. You know, the lot of people in the room? Aha, can we apply that concept to green? And the answer is, Yes, we can.

Tom Raftery:

Okay, anything else? Or is it those three,

Naeem Zafar:

there are other ones too, but those have not been publicly announced. I'm gonna keep them under the hat. But idea. as we as we add more and more environmental conditions, we're smarter we become. So that's our competitive advantage. So we have a very nice pipeline of other things, which could be sense, which can enhance our knowledge of the grain and its quality.

Tom Raftery:

Okay. And so let's say we have a barge and it's full of grain and it's bristling with your sensors. How does does that need to transmit the data back to your data center for the machine learning to kick in and for the analytics to show the barge owner or whoever that is grain needs to have something happened to it?

Naeem Zafar:

Yes. That's the short answer. But answered already, right. So that's why Enbridge has no electronics, there's no way to plug anything in. This is as basic as it is. And so we came up with a spear, two feet long, two meters long shaft with multiple sensors, which you can insert inside the grain compartment in a barge, and all the electronics in his little ball the size of a softball, which has the electronics to talk to sensors collect the data and send them using the GSM signal. cellular signal. It has two year battery life, which is rechargeable, just like your mobile phone. So you know, his two year battery, rechargeable, you insert and you forget and then you have not only a GPS to so when you not only you can see where your body physically is. There could be hundreds of barges, you know, we can tell you the location and the temperature and the moisture level. That's that's that's beautiful.

Tom Raftery:

Nice. Okay, that's barges and silos, any other places that you're operating in?

Naeem Zafar:

Yeah, so of course, rail cars is another use case, in transports that way. But you know this alone, if you look at all this grain, which goes to spoilage and transformation, not just total grain, just a spoilage possibility. That's a $71 billion opportunity worldwide. If you exclude China and India, which is fragmented and difficult to do business with, for us. So then you still looking at in the developer at 13, and a half billion dollar opportunity. So then you can further this segment and buy on farm storage and off farm storage, then you so we are highly focused on on US, Australia and Northern Europe. But as we progress further than obviously where we we are our next stop will be Brazil, Argentina, the next one will be the Black Sea region. And there's so many other places when this problem exists. And so it's we are startup companies are slowly we are building our network and a presence.

Tom Raftery:

Okay. And is the business model a subscription model?

Naeem Zafar:

short answer is yes, the long answer is we do both. So you may want to if you'd like to buy and depreciate the hardware, then you buy the system based on how many units you need. And there is a small subscription for data access data collection analytics, or you say Look, my business sees now I don't want to make a capital investment. We have a pure rental model. So a minimum one year contract in which you go in or selected your cable company you subscribe to cable subscription, they send you a cable box is included. You don't know how much it is. So we have the same we have both models. And last year about 59% of the people use the rental model and remaining use the upfront purchase model. So I think that the issue is okay, how can you help me? A farmer may ask and answer is there are three or four areas where you want We can help you. So let's, let's analyze them and see which because not everything resonate with everybody, depending on their setup and whatever. So one is the early prediction of spoilage. So you can take some action, if you knew in a bin, there was a hotspot developing, what you do is you empty the bin, break the hotspot, disperse that thing, and then fill it back in. So sooner you know, before temperature gets too high, and green gets damaged, you can do that. So that's that that's one value proposition. The second value proposition is okay, I know I have spoilage but knowing that three, four weeks ahead, because I can't, so Okay, let me back up means you can empty but your ground pile, it could be like a football field long, could be two 300 meters long, 100 meter wide, you know, 20 meter deep, that's a pretty lot of grain. What do you do with that, I mean, you're not gonna, you can recycle it. But if you knew that the problem area is in the left south, southeast corner. So when time comes to open the pile, you know where to start. You don't because it may take you a week or three weeks to sell or empty. So that that's good to know where the problem is, let me start there. If it gets really bad, you can even make a forward contract with a animal feed. So this means you can sell that you can make a deal, okay, I'm going to sell it for animal feed. It's not $5 a bushel, it's going to be $3 a bushel, but at least I've locked that in. third option, you have some glyphs palette, not so horrible. So you can do blending. So you have some you can order some really good high quality when you're going to blend with your number three grain, the mixture will be number two, corn, okay? If I know that six weeks ahead, I can make a sensible arrangement. So knowledge is king. It's not just about telling me what's wrong. Let me make smarter decision. If I know what's wrong, how bad is a problem. And sometimes you can insert tubes to pull down cool air to cool off the grand big the hotspot that way. But there are multiple things you can do if you knew. So what people have done until now is they're basically open the bin and sniff it, you know all grandfather who can snip it, I think it's gonna be all right. So now you have to make sure the data which is better than sniffing, sniffing, so very good. But the young farmers, young growers, people who don't have the grandfather's nose, they love it. That's one. So let's talk about the second way it can be helpful. The second way it can be helpful is is your merchandising time. So if you look at, I'm just going to use American vernacular year coin in 2019, was down to like $3.50 a bushel in March. It went up to $3.80 a bushel in April and even $4 a bushel in June, because scarcity, supply and demand a bunch of other factors. So if you knew that my condition of my ground bile is good for extra six weeks, you don't have to sell it at the first opportunity. So not only it helps you get extra supplies, you have a million bushels, extra 25 cents per bushel, there's a quarter million dollars in your pocket. That's the easiest decision he has to make all day. And then it gets more interesting. Because the transport cost of moving the grain from Iowa to Seattle, so you can put on a ship to send it to China or Japan. That fluctuates greatly day by day based on how many people are demanding it. So that knowledge that I don't have to book the rail car in March, I can wait till June 23 April 23. That could be you cut your costs from 30 $200 in car to 15 $100. Huge difference. A farmer may not worry about that, but a co op and in trading companies matters. So the interesting other nuances so we talked about two out of the four. I just want to pause it I don't take all the airtime that we'll talk about two more now go on. So and the other one is energy cost. So I was talking to one large Co Op in North Dakota. So they had some pretty large two piles, 2 million bushels pretty large piles and they had fans constantly running. Why do you have to run the fan because you sucking the air out of the green pile. So the tarp, which is covering the green doesn't fly off. Is sucks it down to protect this electricity bill was $60,000 a month. Oh, he said if you can cut that in half I'm buying your stuff whatever it is, I don't care. So it with intelligent software you can say when winds are strongand tarp can fly off, let's turn on all the fans. When winds are calm and weather forecasters, they will become, maybe turn on half the fans. Because they have 24 fans around the pile sucking, they don't, don't put on them at half the speed. So these are obvious things you would do in your home. But when you have industrial operation, you and the machineries can dumb, then you have to either send people at midnight to make this analysis or people don't. As you can imagine, this is easy thing for software to do. I'm just like kid in a candy store. Because these are easy decision for software. And I've seen this huge opportunities. This is exciting. And the fourth element, which is relevant is public safety. employee safety, a lot of accidents happen in grain business, people get trapped in a pile of grain. It's like quicksand, you just go 20 meters in can breed you that there are all kinds of training happens how to handle how to. So if you have sensors, so you don't have to walk on top of things, or to get the data get a sample. That's good news. So we our approach allows them to do that. They have remote sensors, data is coming to their mobile phone, to their tablet to the thing they can they know what's going on. So they don't have to risk employees, like good for insurance. But for safety good overall. point is when you start thinking about IoT use cases. In the green business, there's several opportunities, which are very attractive. And it's not just about ggrain spoilage, it's more than that.

Tom Raftery:

Okay, Naeem, we're coming towards the end of the podcast now Is there anything I have not asked you that you wish I had any topics that we've not covered that you think it's important for people to be aware of?

Naeem Zafar:

So I think people relate to use cases. So I think this will be, you know, interesting to talk about some of the things which could be interesting, which we are involved with. One of them is many people, especially as in seed business, do contract farming. So you basically have 100 farmers 200 farmers, under your condition your seed, they're growing the weed, and then they'll bring it to you. Problem is many times these farmers show up and they're docked. They're not given the full what they were expecting, because the seed germination level is not what it could be should be or even get rejected. germination depends on a bunch of factors. And among them humidity and temperature, they restore that. So some of the companies in Europe have now decided to tell their content farmer, us tell us in soccer print, so we can even see all of your parameters before you even leave home to bend your track. And we may just tell you don't even bother. Brilliant. So this is incentive for the company Seed Company. They don't waste time and good for farmers, they know that stuff is good. So this, this is another use case. And this is again applies to malt barley, beer making companies, this is a use case for them because it's all about germination. So this is not obvious to us. This is something again, we hit upon as we go forward. Then you have other interesting use cases with potato. So what happens potato was, you know, potatoes are found in certain times, and they're kept because people eat french fries all year long. So you have to store them. What happens is that there was a certain chemical, which was banned in Europe last year, which was for anti sprouting. So the US is still allowed, so people can spray that and then even sprouting, but in Europe, suddenly, potatoes begin to sprout. So you cannot now use them for the purposes. What can you do? So this is another use case driven by a certain law regulation change where we are right there with the right product at the right time. So point is for lesson for entrepreneurs is you don't know what's ahead. I have no idea that any of these things existed. But if you're curious, and you're listening, and you're flexible, and you're creative, there's so much you can do. And to me, that is the journey for any professional if you're thinking about it. That's why entrepreneurship is life. If you don't know what's around the corner, everyone has a new surprise. So I'm learning things. I'm creating things. What better way to spend your professional career.

Tom Raftery:

True, true, true. Okay, name that has been really great. If people want to know more about yourself or about tele sense or any of the things we talked about in the podcast today, where would you have me direct them?

Naeem Zafar:

Well, we can go t Telesense.com but you can also go to NaeemZafar.com. And ther 's even more informat on about things which I'm pas ionate about. So Telesense.com is all about what we do. And t ere's more to the story than go to NaeemZafar.com.

Tom Raftery:

Superb great. Nae m that went fantastic. Thanks a million for coming on t e podcast toda

Naeem Zafar:

That was joy. Good to talk to you, Tom.

Tom Raftery:

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, head on over to sa p.com slash digital supply chain or, or simply drop me an email to Tom.raftery at sap.com. If you like the show, please don t forget to subscribe to it i your podcast application o choice to get new episodes a soon as they're published. Also please don't forget to rate an review the podcast. It reall does help new people to find th show. Thanks. Catch you all nex time