Going green with a little help from your friends: interview with David Hyatt
Companies embarking on supply chain sustainability programs don't have to go it alone, says David Hyatt of the University of Arkansas. In fact, they'll go farther faster by partnering with other businesses and outside agencies.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
When implementing sustainability programs for their supply chains, companies don't have to go it alone. They also have the option of teaming up with other businesses as well as outside entities like environmental non-governmental organizations.
Such partnerships can go a long way toward getting a sustainability program off the ground and boosting its chances of success, according to a study by David Hyatt. Hyatt, a clinical assistant professor of supply chain management at the University of Arkansas' Sam M. Walton College of Business, specializes in research on sustainability in global supply chains—in particular, how non-profits and businesses can collaborate to solve issues related to the natural environment. Last October, the Council of Supply Chain Management Professionals presented Hyatt with the 2011 E. Grosvenor Plowman (Best Paper) Award for his report on that research, Proactive Environmental Strategies in the Supply Chain: An Exploration of the Effects of Cross-Sector Partnerships.
Hyatt spoke recently with DC Velocity Group Editorial Director Mitch Mac Donald about his research, the challenges that lie ahead, and the steps any company, large or small, can take right now to start down the path of sustainability.
Q: Current thinking holds that adopting sustainable practices is not just good for the planet but can also be good for a business's bottom line. Does your research support that view?
A: Yes. Businesses are starting to see that they are embedded within a social system and that the social system, in turn, is embedded within the environmental system, which has fixed limitations. The challenge for businesses is to get a sense of what the long-term environmental limitations are and start to work within that framework.
Q: When you say "fixed limitations," what do you mean? A: Well, carbon emissions are becoming a serious issue for a number of businesses. They are taking climate change seriously because it affects what their markets are going to be and where those markets are going to be. Other issues are energy costs, which in recent years have increased dramatically. In the United States, energy is heavily subsidized for businesses, leading to prices that are quite low compared with many other areas of the world. That has not worked in our favor because the other areas of the world have been innovating around energy for a number of years.
Q: The subsidy has removed the free market motivation to look for ways to save energy? A: Yes. The challenge is figuring out a way to internalize the externalities that businesses are creating so that we price goods to reflect their impact. That's where we're going to be heading within 20 years.
One big push we're seeing right now has to do with all these sustainability score cards and transparency across the supply chain. In 2009, the University of Arkansas and Arizona State University formed the Sustainability Consortium. There are now about 70 members of the consortium, most of which are private-sector companies. What the consortium membership seeks to create is some sort of standardized way to measure the sustainability of consumer products. Whether this particular effort is successful at that or not, it shows us the direction.
Q: What's prompting the focus on standards? A: Before they can start down the sustainability road, companies need a full life-cycle analysis for their products, which they can then use to assess their performance and measure their progress. What they all want is life-cycle analysis based metrics, some sort of independent standards that are transparent.
They see that they've got to get a handle on what's happening in their supply chains, and that can open up new opportunities—if you can use your supply chain to generate innovation, that could give you a short-term competitive advantage around particular products. In our research, we just spent some time at Walmart talking with them about sustainability. We are thinking about this idea of a lens of sustainability. If you look at your operations through the lens of sustainability, you see opportunities that you didn't see before. At Walmart, for instance, when they were using the lens of sustainability to look at plastic bags, they realized that in one country, they were sourcing bags from five different vendors. They discovered it because they were using this lens of sustainability.
The other dimension is a systems view. I was interviewing one manager who said, "Well, for me it gets back to seeing a product within the system in which it lives." As you know, retailers generally have focused on their margin between cost and sale price, so this is causing some of them, including Walmart, to become more involved in the product design. This manager described to me the kind of product change he envisions. He wants to think of his product as something that is cast in a mold and is packaged in a particular way to be moved and transported in a particular way, stacked on the shelf in a particular way, and has a particular utility in its consumption. There's a strategy for its use, whether it is recycled or disposed of or repurposed back into the supply chain. That is very much a systems way of thinking—and a potential source of innovation for the company.
Q: If you're responsible for your company's logistics and supply chain operations and you see this coming, what steps can you take to start making your business practices more sustainable? A: Clearly, one of the most important things is just figuring out where you are. Before you can really innovate, you have to know what's going on in your supply chain.
Initiatives like the consortium can help us better measure sustainability. Companies and government and non-governmental organizations (NGOs) can collaborate in this space without a lot of risk in general for companies around competition. There is a lot of concern about sharing too much. But at this stage, businesses can effectively collaborate with one another in a pre-competitive way. They can compete on it later once the standards are developed.
Q: You noted that some companies are concerned about the potential competitive risks with this program, but isn't there a greater risk if you don't start embracing green initiatives? A: Yes. There's a lot of pressure on companies right now to reduce the environmental impact of their operations. There is also emerging legislation around that kind of thing. So, it does create a greater risk in the organization.
There's another perception around sustainability—that it doesn't reduce costs, it adds costs. Those might be compliance costs or extra costs associated with transparency, for instance. There is probably some truth to that, that in some cases it will add cost. But this is not the right lens to have on. If you think from the perspective that it is going to reduce your costs, then you begin to see all these opportunities.
Q: So what comes next? A: It turns out that there's a lot of data collected by companies about these issues and there are even some large databases that contain life-cycle analysis information. The next step would be to pull this together. Can we establish baseline measurements for a particular kind of product, like a soup can? Once we have ways to measure the sustainability of a consumer product and achieve some consistency across the supply chain in measuring it, then companies will be competing on it.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.