Peter Brereton of Tecsys On What We Must Do To Create Nationally Secure And Resilient Supply Chains
An Interview With David Leichner
Cryptocurrency has become the great enabler of cybercrime. If we’re going to allow cryptocurrency to survive and thrive in our economy, we must find ways to bring it back under the rule of law so that it cannot be used to monetize attacks on corporate networks and ultimately supply chains. There is no question that there are state actors who are in it simply to damage western democracies, but in many cases, these are simply for-profit entities that have found the latest and greatest way to rob the wagon train. I don’t think I really need to provide specific examples here; I think probably every one of us in business knows of a customer or supplier, or, in fact, our own businesses that have been held ransom by cybercriminals in exchange for a crypto ransom.
The cascading logistical problems caused by the pandemic and the war in Eastern Europe, have made securing a reliable supply chain a national imperative. In addition, severe cyberattacks like the highly publicized Colonial pipeline attack, have brought supply chain cybersecurity into the limelight. So what must manufacturers and policymakers do to ensure that we have secure and resilient supply chains? In this interview series, we are talking to business leaders who can share insights from their experiences about how we can address these challenges. As a part of this series, I had the pleasure of interviewing Peter Brereton.
Peter Brereton serves as president and CEO of Tecsys, a global supply chain management software company that includes among its customers third-party and complex distribution sectors, the healthcare sector, as well as government bodies and agencies. Peter joined Tecsys at its inception and initially led the company’s software development, product management, sales and marketing. In 1995, he was appointed president. In 1998, Peter was appointed CEO and was largely responsible for the company’s Initial Public Offering. In 2019, Peter was recognized with an EY Entrepreneur Of The Year® award in Quebec.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you. Can you tell us a bit about how you grew up?
I grew up in Toronto, Canada as the fifth in a family of six kids. I spent my summers at the family cottage in Muskoka back when cottages in Muskoka were still small cottages; Muskoka is now the luxury retreat and resort area for the city of Toronto. My dad was the VP of Finance for White Motors until I was seven. He then worked as a travelling pastor among the group of churches I grew up in, until I was 14, when he passed away suddenly. My childhood had several chapters, some with more money and some with less, but it was a great family, and we are all still quite close.
Can you share the most interesting story that happened to you since you began your career?
I think that would be our rapid pivot to the U.S. market in 1993–1995. We had been a Montreal-focused business from 1983 to 1993, but the political situation changed in Quebec when a referendum was planned in 1995 to decide whether to keep Quebec as part of Canada or to leave and become its own country. New business in Montreal collapsed very quickly and we swung our attention to the U.S. market. It was a very tense time financially, but I essentially lived on airplanes for a couple of years. My wife and I had three young boys, and our daughter was born in 1994. My wife backed me 100% and told me to do what I had to do, and she would hold the fort at home. By 1995, Tecsys’ revenue was approximately 80% U.S. and we had become a successful software company selling our supply chain-focused ERP solution to suppliers to Walmart and other large retailers.
You are a successful leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
It’s an interesting question; I don’t really think about how to lead, I just do it. But I also think it’s like a muscle that you can strengthen by exercising it.
I think that to lead successfully, you must create a measure of unity among a diverse group of people. Most successful organizations have intentionally diverse talent. The thinking of an HR leader may be very different from the thinking of a Sales leader or an R&D leader. That difference is a strength, but to lead that team well, there must be both a shared vision and a respect for differences. That calls on a leader to have the desire and ability to find or create unity. How is that done? I think being a normal person helps; to be relatable and honest, and to treat everyone as you would like to be treated. As Jesus said, “Do unto others as you would have them do unto you.” When you make a mistake, admit it. If you treat someone poorly in public, apologize in public.
Leading also requires the ability to see beyond the now; to be able to describe a future in such a way that others can see it too and want to be part of it. We need to envision what could be, and then enlist and motivate the right people to help us build that future. This is the essence of leadership. After all, it’s been said that someone leading with no one following is only taking a walk.
Are you working on any exciting new projects now? How do you think that will help people?
I have a few projects on the go right now. On the home front, we’re just finishing up a small sleeping cabin in the woods for our grandkids. We have ten grandsons and one granddaughter, so the cottage was getting a bit crowded! On the work front, we are experimenting with artificial intelligence to drive cluster picking and reduce the amount of travel time in the warehouse by 18–30%. For hospitals, we are making changes to our operating room software so that we can drive further improvements to patient safety and outcomes while reducing cost and time in the OR.
Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. In order to ensure that we are all on the same page let’s begin with some simple definitions. What does the term “supply chain” encompass?
The term supply chain covers the entire journey of product from raw material to production into finished goods and then all the way to point of final consumption and even management of waste and by-products. Many supply chain problems are caused by a failure to understand the length and complexity of the chain and the potential points of failure.
Can you help articulate what the weaknesses are in our current supply chain systems?
Where to start? Many of our critical supply chains span the globe and yet are based on very concentrated sources. Chip manufacturing is concentrated in Taiwan; PPE is concentrated in a couple of regions in China; drugs are manufactured in low-cost jurisdictions and then shipped more than ten thousand miles. This sets us up for a variety of weaknesses. Drugs can be swapped out for fakes, and storms or wars can wipe out access to products that are critical to our economy, health, or both. Our chains are too long, too exposed, and yet too concentrated.
Can you help define what a nationally secure and resilient supply chain would look like?
We must determine what is critical to our security and general well-being. If my living room sofa shows up months late or is unavailable due to supply chain constraints, that’s bad for the economy and a pain for me, but hardly a national security issue. On the other hand, if the auto industry starts to collapse due to unavailability of microchips, or my blood pressure meds are unavailable because a factory in China started using carcinogenic ingredients, that’s a bigger problem. If we can’t get enough oil to drive our entire economy (which is still very carbon dependent) or enough steel to build what our military needs, that’s a catastrophe.
Once we have decided what is critical, we need our governments to take action to make sure that the supply chains for those critical things are short or at the very least, friendly. As much as I hate import duties, this could be an area where they make sense. It needs to make economic sense for companies to manufacture chips, drugs, steel, etc. onshore or friendly, and duties properly applied can make that happen.
My particular expertise is in cybersecurity so I’m particularly passionate about this topic. Can you share some examples of recent and notable cyber attacks against our supply chain? Why do you think these attacks were so significant?
The examples are numerous and involve both for-profit cyber criminals as well as nefarious governments seeking to cripple our countries’ economies. Most of us are aware of the attack on the East Coast pipeline that happened in May 2021. That one was a ransomware attack and was the result of a compromised password that allowed the criminals inside the VPN. Once that happened, the pipeline was down.
Another interesting example was the attempted attack on the cold chain for the COVID vaccines. The pandemic effectively hit us in March of 2020 and by September, a sophisticated phishing attack was underway in an attempt to interfere with the cold chain necessary to get the vaccines to market. That one failed, from what I understand, but it had the hallmarks of a state-sponsored attack and was a clear warning that the world we live in is not as friendly as we like to think it is. The significance of these is not to be underestimated. Either of these attacks had the potential to result in the crippling of our economy or sizable loss of life. For every one of these media-worthy attacks, there are hundreds of attacks on small businesses with ransoms demanded ranging from a hundred thousand to a few million. This is siphoning a large amount of energy out of our economy.
It seems like a throwback to earlier times. For the last century or so, businesses have gotten used to being able to focus on competing in the marketplace while leaving the issues of safety and security to the police and the courts. No more … We are back in the Wild West of sorts, with sophisticated criminals blackmailing businesses and police unable or unwilling to do much about it since it usually crosses international boundaries.
What would you recommend for the government or for tech leaders to do to improve supply chain cybersecurity?
I commented earlier on the role that government could play in securing our critical supply chains. I believe our governments also need to get real about managing the risks created by cryptocurrency. Crypto, and primarily bitcoin, is being used to monetize cyberattacks. Stop the money flow and much of the incentive for the attacks will disappear. If we are going to allow crypto to continue to grow within our financial value streams, we need our governments to force the banks to come clean about the actors involved in the outer ends of the crypto flows. It’s where it is being converted from dollars or to dollars that it is most vulnerable.
In terms of tech leaders, this is just a question of priorities. We have the technology to create reasonably secure networks, but we don’t get it done because the business insists on other priorities. Everyone, from the Board to the CEO to the CIO and to the rest of the company, needs to recognize that we can’t keep leaving our front doors hanging open and expect to run secure supply chains.
Ok, thank you. Here is the main question of our interview. What are the “5 Things We Must Do To Create Nationally Secure And Resilient Supply Chains” and why?
Solve the crypto problem
Cryptocurrency has become the great enabler of cybercrime. If we’re going to allow cryptocurrency to survive and thrive in our economy, we must find ways to bring it back under the rule of law so that it cannot be used to monetize attacks on corporate networks and ultimately supply chains. There is no question that there are state actors who are in it simply to damage western democracies, but in many cases, these are simply for-profit entities that have found the latest and greatest way to rob the wagon train. I don’t think I really need to provide specific examples here; I think probably every one of us in business knows of a customer or supplier, or, in fact, our own businesses that have been held ransom by cybercriminals in exchange for a crypto ransom.
Shorten the chains
Short supply chains are not always possible, but generally, the shorter the chain, the more reliable it is and the fewer the points of potential failure. If a company is located in the northeast and their requirements for products are in the northeast, then dealing with a northeastern-based manufacturer substantially limits the amount of risk. It is often economics that cause us to set up supply chains that span the globe. It may be cheaper to purchase certain types of products, especially if they have a significant labor component, from regions of the world with much lower cost of labor. Those regions also usually come with increased political and shipping risks as well as extended time on the water. If I buy all my PPE from one region in China and that region goes into lockdown, I’m out of PPE within a couple of months. We need to use automation to remove a lot of the labor cost so that we can stop harvesting trees here, shipping the fibers to China to be made into masks to ship back here. This is higher risk, less agile and creates a higher carbon footprint.
Be realistic about buffers
An analysis of inventory days supply on hand (DSOH) and the safety stock required to maintain a predictable and reliable supply chain has always been part of the science used by any good supply chain manager, however the pressure to increase inventory turns and tighten the cash-to-cash cycle often means that logical levels of safety stock and reasonable DSOH get squeezed down to a level that is barely above that which is required by a perfect supply chain. We don’t have perfect supply chains! In today’s world, with the increasing unpredictability of weather and geopolitical challenges including wars and changing tariff situations, this often means that that tradeoff made to improve the cash-to-cash cycle simply isn’t worth it. We must be realistic about what is necessary to maintain an adequate safety stock and we must also factor in criticality. This means determining the products for which there is simply no realistic financial measurement for the cost of a stockout. If a hospital network knows that whenever a certain drug is required, someone dies if they don’t have it, then the usual DSOH and safety stock calculations go out the window. We’re now looking at criticality and how to minimize loss of life while still living within a reasonable overall fiscal framework.
Implement integrated real-time digital supply chain platforms
This may sound biased but it’s impossible to manage today’s supply chain without a properly integrated real-time digital supply chain platform. This platform needs to be well-matched to the business. Many companies have had difficult experiences trying to mangle an agile supply chain onto an old-style monolithic platform that forces the business to operate extremely inefficiently to fit onto that platform. Find the platform that fits your business and implement it. Many of the platforms running supply chains now were implemented between 1997 and 2000. The platforms implemented in time for Y2K are simply not able to keep up with today’s agile demands. We live in a rapidly shifting world and there is increasing pressure to deliver efficiently all the way from point of manufacture to the consumer doorstep. The old supply chain platforms assumed that manufacturers ship truckloads and distributors ship pallets and retailers receive pallets and ship cases to stores. Well, that paradigm is gone. Many industries are also dealing with new regulatory requirements around track and trace or chain of custody; who owned this stuff, who touched it, who moved it, what temperature was it stored at? If you are moving drugs covered by DSCSA or hazardous materials, etc., you will find that yesterday’s systems are too inefficient at meeting these demands.
Upgrade the buying function
The buying function within any organization needs to see a substantial shift in capability if it is going to be able to fulfill its critical function in maintaining and supporting a reliable supply chain. Gone are the days when a buyer’s function was simply to make sure that he or she bought enough stuff so that nobody ran out. This function requires a sophisticated understanding of financial metrics, supply chain metrics, risk management and risk tolerance in order to be able to make the appropriate decisions and set the appropriate parameters in the automated buying tools now available today to this sophisticated buyer. We see many organizations that are either under-equipped in terms of the tech they are using, or under-equipped from an HR perspective, or both. The ROI for getting this right is immense.
Know where your stuff is
It is virtually impossible to properly manage a resilient supply chain if you don’t actually know where your stuff is. Fortunately, if you have already implemented a real-time digital supply chain, then you already have this problem solved. Unfortunately, many in the healthcare industry learned this the hard way as the pandemic hit and they suddenly realized that while their accounting systems told them that they had 120 ventilators and X amount of PPE in stock, their material management solution was unable to tell them where it was. The hospital networks with real-time digital supply chains stood out from the rest of the pack in terms of their ability to cope with the sudden challenges of the pandemic.
Know where your key products originate
It doesn’t help much to ensure that you have three different suppliers for some of your key products if it turns out that all three suppliers are buying their product from the same manufacturer or from the same region. Remember back to the hurricane that hit Puerto Rico a few years ago; numerous hospital networks were quite surprised to find that their sources of some drugs and medical supplies all came from the same region of Puerto Rico. They thought they had diversified their sources of supply by buying from different distributors only to find out when the storm hit that all those distributors were sourcing product from the same location. This caused significant challenges for the healthcare sector for the 12 to 18 months following the hurricane. Similar issues have happened in the rubber industry where factory fires have created shortages with ripple effects far beyond the tire sector. We need to get better at balancing the pressure for short-term cost savings with the longer-term need for resiliency and security. There is no easy answer here, and there certainly isn’t a one-size-fits-all answer, but you don’t want to end up caught flat-footed in a situation that you didn’t even consider.
Are there other ideas or considerations that should encourage us to reimagine our supply chain?
We must constantly think about reimagining the supply chain. All the factors that went into deciding how to set up a supply chain five years ago may no longer apply. Labor is expensive and sometimes hard to find, nations that seemed friendly don’t seem so friendly right now, storms seem to be increasing, and ports are overloaded. On the flip side, we have some brilliant automation happening that makes on-shoring more realistic, on-demand printing has forever changed the book industry and 3D printing may well change the toy and home furnishing industries next. Imagine if you order a nice decorative shelf for your dining room and it is printed at the nearest Home Depot and delivered next day. Never stop reimagining the supply chain. If you ever think you have it all settled, you’re probably starting to lose the game.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I’ll ignore the flattery, but I would love to see a movement to put social and environmental decisions into the hands of consumers. I believe it would bring about substantial changes in the supply chain; it would benefit the lives of supply chain workers and could massively reduce the impact of today’s supply chain on the environment.
Imagine this … I’m ordering coffee beans online from the world’s largest retailer. As I’m completing the order, I’m asked two questions. #1: Are you in a rush for this, or can we minimize the carbon footprint of this delivery? #2: Do you mind if this order takes an extra day or two, because we’d like to minimize weekend and night work for our employees? In 99% of the orders I place, I would say yes to both questions! I ordered a cute little plastic bear toilet paper holder for our cottage a couple of years ago. It was delivered from Vancouver to Montreal within 24 hours. That’s impressive, but that means they flew it. That’s wild — and unnecessary for my needs. I would not have cared if it took two weeks. By checking two boxes, I could reduce environmental impact and allow supply chain workers to be home when their kids were around during evenings and weekends. I would love to see that happen.
How can our readers further follow your work online?
I don’t write much, but the Tecsys Twitter feed will link you to anything I write that is industry related: https://twitter.com/Tecsys_Inc
This was very inspiring and informative. Thank you so much for the time you spent with this interview!
About The Interviewer: David Leichner is a veteran of the Israeli high-tech industry with significant experience in the areas of cyber and security, enterprise software and communications. At Cybellum, a leading provider of Product Security Lifecycle Management, David is responsible for creating and executing the marketing strategy and managing the global marketing team that forms the foundation for Cybellum’s product and market penetration. Prior to Cybellum, David was CMO at SQream and VP Sales and Marketing at endpoint protection vendor, Cynet. David is a member of the Board of Trustees of the Jerusalem Technology College. He holds a BA in Information Systems Management and an MBA in International Business from the City University of New York.
