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Alex Saric, chief marketing officer at Ivalua, has spent more than 15 years of his career evangelizing spend management, shaping its evolution, and working closely with hundreds of customers to support their digital transformation journeys. As CMO at Ivalua, Saric leads overall marketing strategy and thought leadership programs.
Saric also spent 12 years at Ariba, first building and running the spend analytics business as general manager. He then built and led Ariba’s international marketing team until successful acquisition by SAP, transitioning to lead business network marketing globally. Earlier, Saric was a founding member of Zeborg (acquired by Emptoris), where he developed vertical procurement applications.
He began his career in the U.S. Cavalry, leading tank and scout platoons through two combat deployments. Saric holds a B.S. in Economics from the U.S. Military Academy at West Point and an international M.B.A. from INSEAD.
David Maloney, Editorial Director, DC Velocity 00:01
How can logistics professionals collaborate better with suppliers? Gartner releases its global Supply Chain Top 25 list. And drayage rates are on the rise again.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm David Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Rite-Hite. How are you helping to keep your workers on the dangerous drive approach safe? Approach-Vu from Rite-Hite detects backing motion in a drive approach and presents an immediate clear, audible, and visual warning to pedestrians in front of the loading dock. For more information, visit RiteHite.com. That's R-I-T-E-H-I-T-E dot com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today: most logistics professionals have had to scramble the past two years when it comes to managing their supply chains. But new research shows that better collaboration with suppliers can help minimize supply disruptions, improve sustainability efforts, and promote innovation. To find out more about that research, here's Victoria with today's guest.
Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:26
Thanks, Dave. Our guest today is Alex Saric. He is chief marketing officer at spend-management software provider Ivalua. Welcome Alex.
Alex Saric, Chief Marketing Officer, Ivalua 01:36
Well, thanks for having me, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:39
It's a pleasure. Thanks for being here. Your company recently released a study about strategies companies are using to minimize the frequency and risk of supply chain disruptions. What did you learn?
Alex Saric, Chief Marketing Officer, Ivalua 01:52
We did, and there were actually a few really interesting results that came out of it. Maybe, to highlight three: The first one was, there's a lot of overconfidence. 77% of the respondents actually said that they had performed better than their competitors when it came to supply continuity in the last year. Only 5% felt that they were worse. Forrester conducted their own assessment of the respondents and found only 13% are really advanced, and most are actually far behind that, and that's concerning, because that overconfidence, it's dangerous, it can lead to not taking the right action to actually improve. Second, I think it was also really interesting that when we looked at the strategies that different leaders were doing to address supply resilience and continuity, leaders were actually doing less. They were applying fewer strategies than everyone else. But they're just applying, obviously, more focus, and doing things that are really addressing the real issues, and using strategies that work—especially at more actively monitoring risk. They also had been faster to move towards nearshoring. And then lastly, maybe I'll just highlight that, it was also very clear what the top barriers were for organizations to have higher and better supply continuity, and it was really around transparency at both the category as well as the supplier level, as well as better collaborating with suppliers, which is really key towards overall resilience.
Victoria Kickham, Senior Editor, DC Velocity 03:13
I should have asked you at the outset, too, so what kinds of companies in size are we talking about here? What generally [is] the the audience that you surveyed.
Alex Saric, Chief Marketing Officer, Ivalua 03:23
So, the overall response had over 400 respondents. It was all director and above, across industries, really a pretty broad spectrum, covering really all the major markets in U.S., Europe, and Asia. So it was a fairly diverse global study.
Victoria Kickham, Senior Editor, DC Velocity 03:37
Great, thank you. So, you mentioned collaboration as a key point. Can you tell us a little bit, you know, what do you mean by this ,and what specific steps can companies take in that regard?
Alex Saric, Chief Marketing Officer, Ivalua 03:49
Sure. Yeah, collaboration is definitely a key to improving continuity. You know, the leaders in the survey actually noted that the number-one opportunity from improving collaboration was around supply continuity, and it also helps with, really, all today's top objectives, from improving ESG [environmental, social, and governance efforts], supplier-led innovation improving margins. What we really found is, the leaders collaborate in more ways, and with more suppliers. And there are a couple of areas, if someone's looking at this, what you really need to do. The first is sharing more information. And this needs to be bi-directional. From the supplier side, that means sharing information on your own suppliers, your, the dependencies that are important. They can help the buyer better assess their risk and how vulnerable they are. And from the buyer side, you need to really think about sharing the company's strategy, and specifically keeping suppliers informed about your forecast and your planned orders, because that lets them plan their own purchases, manufacturing, inventory to better serve you. And then the second area is really working together to improve. You need to give suppliers flexibility in how you meet requirements, and whenever you find weaknesses, areas to improve, which inevitably are going to come up when you have an open relationship, really defining what the improvement plans are and monitoring and working against that are really key.
Victoria Kickham, Senior Editor, DC Velocity 05:02
The report, I think, also deals with how, you know, this issue of better supplier collaboration can help improve a company's sustainability efforts, and I heard you mentioned ESG, just a minute ago. Can you talk about the growing importance of sustainability and how collaboration can help, and maybe, to talk a little bit about that?
Alex Saric, Chief Marketing Officer, Ivalua 05:22
Yes. There's definitely a lot of evidence these days on the adverse impact of human activity on the environment. Unsurprisingly, then, you know, governments are increasingly legislating and regulating the behave—businesses can behave in a certain way, and you'll achieve certain objectives. And also employees and customers increasingly are looking to brands they associate with, they have the same values, and sustainability is one of the key ones. So, I think acting on sustainability, it's really not just the right thing to do these days, but it's also the smart thing. Now, for most businesses, success and being more sustainable has to involve working with suppliers. If you look at carbon emissions, it's a big part of sustainability. Scope 3, or the supply chain emissions [those emissions not caused directly by the organization assessing its supply chain impacts], actually account for 70 to 80%, for the average organization—some metrics from McKinsey. And if you look at areas like improving the reusability or recyclability of the products by your customers, it really comes down to the materials, and that has to involve suppliers. But it's not just about selecting suppliers to have a lower carbon footprint, or are just generally more sustainable. You can drive some kind of step-change improvements. But the reality is, most companies are nowhere near where they want to be and need to be, from a sustainability perspective, so the biggest gains are going to come from kind of driving ongoing, continuous improvements. And that's really something that [you] have to work with suppliers. And actually, in the study, the number-one barrier that respondents identified to improving sustainability was actually a lack of systems to enable effective, scalable collaboration.
Victoria Kickham, Senior Editor, DC Velocity 06:59
You mentioned a couple of things there, you know, Scope 3, and recycling efforts. Are there specific sustainability goals most companies are working toward, you know, that you were able to identify from your study?
Alex Saric, Chief Marketing Officer, Ivalua 07:11
Yes, I'd say the answer is yes and no, on the good and bad side. Yes in that there are definitely specific areas that are considered very important. A majority of the respondents said that reducing their own power consumption, helping customers recycle more of the materials from their products, and reducing the supply chain's overall carbon emissions. Those three areas were identified as being very important to the business by the majority of respondents. So that's the good news. They clearly have some specific areas that they're targeting to improve. The reason I said "and no," is, unfortunately, when we looked at, well what specific targets or policies you have in place, actually, less than 20% actually had either of those, for any of these areas. So, you're we're still unfortunately at a point where we kind of know what we need to improve, but there's not a huge amount of action taking place in most organizations.
Victoria Kickham, Senior Editor, DC Velocity 08:05
The report also addresses product innovation. How does collaborating with suppliers help drive that process?
Alex Saric, Chief Marketing Officer, Ivalua 08:12
It's an important part of that. I mean, for most businesses, they really outsource more of their products and services over the past, you know, 10, 20 years to suppliers, so more of the expertise is outside of the company these days. And then, regardless of how innovative a company is, there is always benefit to pulling ideas from external specialists, and suppliers are a great source of that. So, collaboration is really key, as far as openly communicating what you're trying to achieve, rather than just specifying the exact specifications of what they have to provide, and then letting suppliers offer innovative solutions. And we've always found that if you give suppliers more flexibility, they often come up with great ideas. And that can be a greener option or lower-cost approach that increases the overall margin throughout the entire value chain, rather than just negotiating who gets a bigger share of the pie. And, actually, what we found in the study was the top strategy that actually led to improving supplier-led innovation, which the majority of the respondents indicated, was actually implementing systems to improve the collaboration. And we've seen that in our own experience as well. Meritor is a global automotive leader that we work with. They actually digitize the entire product and supplier lifecycle as part of a board-level initiative to improve profitability, and to allow them to deliver more products at higher margins, faster than they had in the past and multiply their stock price in the years following that initiative.
Victoria Kickham, Senior Editor, DC Velocity 09:35
Getting back to the supply chain delay and disruption issues we talked about at the outset, you know, we've been experiencing this these challenges for a couple of years now. What's your outlook for the remainder of 2022 in this regard?
Alex Saric, Chief Marketing Officer, Ivalua 09:49
No, I really wish I had a crystal ball. The world's definitely become so unpredictable, it's really becoming hard to predict anything, but I'll take my guess. So, I have my own feelings, and unfortunately it's that the year is gonna stay tough. I think, you know, demand seems to be staying high. Hopefully it's going to continue, and I think it will, even if it moderates a bit. And at the same time, a lot of shortages taking place at the materials level, at the components level—I mean chips being one of the high-profile ones, but not the only—I think they're gonna persist. They're not, there's not a quick and easy solution to those. And at the same time, a lot of the adjustments that companies are making to their supply chains, it's gonna take time. Now, all that said, I think that type of environment presents a big opportunity, and I think that companies that have established themselves as customer of choice with their suppliers, and had invested in the processes and the systems that are going to help them better assess and engage their suppliers, are going to be at a big competitive advantage and able to grow their market share, while, I think, unfortunately, majority are going to struggle and find that their results disappoint.
Victoria Kickham, Senior Editor, DC Velocity 10:56
Thank you. Alex, can you tell us where our listeners might be able to find more information on your study and your report?
Alex Saric, Chief Marketing Officer, Ivalua 11:04
Yeah, absolutely. So, the easiest thing is to just go to Ivalua.com. It's currently highlighted at the top of the homepage, where you can always go to the resource page to download either this study or one of the many pieces of research and customer stories that we promote on there. So, I encourage everyone to visit us.
Victoria Kickham, Senior Editor, DC Velocity 11:22
Terrific. Thanks very much, and thanks again for being with us today.
Alex Saric, Chief Marketing Officer, Ivalua 11:26
Thanks for having me.
Victoria Kickham, Senior Editor, DC Velocity 11:28
We have been talking with Alex Saric of Ivalua. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 11:34
Thank you, Alex and Victoria. Now let's take a look at some of the other supply chain news from the week. And, Ben, Gartner released its global Supply Chain Top 25 list this week, and you wrote about it. Can you share some of the trends we are seeing in top-performing companies?
Ben Ames, Senior News Editor, DC Velocity 11:51
Yeah, glad to. The analyst firm Gartner keeps a close eye on global supply chains and how top-performing companies handle a lot of the current challenges that we've all been seeing, and they've actually created a metric for measuring that performance. That's how they order the different companies, and they created the global Supply Chain Top 25. And, to cut to the chase, they found that Cisco Systems grabbed the top spot—for the third consecutive year, actually. The rest of the top five were Schneider Electric, Colgate-Palmolive. Johnson & Johnson, and PepsiCo. Mike Griswold, he is vice president and team manager with the Gartner supply chain practice, who organized this, explained why, and he said that Cisco continues to adapt in various ways to the changing environment, and its supply chain moves in alignment. Griswold also said that ESG—that's environmental, social, and governance—is a big focus for them, with circular concepts—that has to do with recycling and reuse—incorporated into the design and operations and consumption aspects of what they do. The report also has a "masters" category, they call it, and that recognizes sustained supply chain excellence over multiple years. For the purposes of this report, that means that companies that get top-five rankings for at least seven out of the last 10 years, and in the most recent report, that masters category featured Amazon, Apple, Procter & Gamble—they go by P&G now—McDonald's, and Unilever. So, Gartner pointed out that those companies provide really good examples of how to deliver agility and responsiveness for sustained periods of time, and they suggested that other chief supply chain officers can look to them for best practices.
David Maloney, Editorial Director, DC Velocity 13:37
Yeah, that's interesting. Did the report specify what any of those best practices were?
Ben Ames, Senior News Editor, DC Velocity 13:42
Yes, indeed. Gartner identified four broad trends that they said the top performers shared. So, first, those chief supply chain officers have become drivers of new business models and commercial innovation—so, beyond strictly supply chain. So, to do that, they're looking beyond their own company and creating what Gartner calls "coopetition-based ecosystems"—cooperation and competition—to address the really large-scale challenges. That's a little complex, but they gave an example, and that's something called the Consumer Goods Forum, which helps develop plastic recycling technologies that many different companies can use. Second, leading companies handling the ongoing disruption that we're all seeing with better agility than others. Sounds kind of obvious, but they did give another helpful example: Some companies have created temporary transformation teams to address some of those near-term challenges, with the knowledge that the people who work on those teams will then return to their day-to-day work once the environment has stabilized. I know we're all looking forward to an environment that is stabilized someday soon, so we'll have to see when that happens, but that's the idea. Third, the top companies have announced ambitious net-zero climate goals, and that includes Scope 3 emissions. What Scope 3 means is not just your own company's emissions, but also your suppliers' and customers'. So that extends beyond their own corporate realm to look at those full climate emissions. Gartner said that companies such as Walmart, Microsoft, and Unilever have actual formal programs in place to track the status of supplier reduction projects and quantify those results. And lastly, the fourth general trend that those leaders shared, Gartner said, is that supply chain leaders are balancing their long-term investments in automation with immediate, or short-term investments to improve employee workflows. So, not just the automation, but the human workers. So, examples of that include relationship building, responding to new operating conditions, and working alongside cooperative robots—some, we also call cobots. So, those are the ideas. You know, they sound a little obvious when you say them, as a shared value, but, you know, and some of those specific programs that can really make a difference.
David Maloney, Editorial Director, DC Velocity 16:08
Yeah. Well, they all seem like good goals for any supply chain company working to improve their operations. Thanks, Ben.
Ben Ames, Senior News Editor, DC Velocity 16:15
Glad to.
David Maloney, Editorial Director, DC Velocity 16:16
And Victoria, you wrote this week about the continuing surge in drayage rates. Can you share some details?
Victoria Kickham, Senior Editor, DC Velocity 16:23
Absolutely. Happy to. So, yeah, so, port disruptions and delays worldwide have contributed to surging drayage rates here in North America, and that's a trend that's likely to continue. That's according to an industry report released this week that we reported on. Most of our listeners may know this, but for those who don't, drayage, it's an industry term for moving freight short distances, typically from a terminal or port to the next mode of transportation, whether it be rail, air, and so forth. The data out this week is from drayge service provider Book Your Cargo, or BYC, which produces its BYC Drayage Spot Market Index each month. The index is based on data and metrics from BYC's customers and business partners, and the company's forecast for June shows a 28% increase in drayage spot-market rates this month, compared to June of 2021. So, that's a big increase. The BYC report also predicts a more than 18% increase in the national drayage spot rate for the third quarter of this year, so looking ahead to July through September, and that compares to a 7% increase during the same period last year. There are many factors contributing to the problem, of course, but global supply chain snags are one of the biggest. The BYC report points to the growing volume of vessels anchored outside of ports in Shanghai and Ningbo, China, as a key contributing factor to the rate hikes, excuse me, here at home, for example. Most of those vessels will eventually make their way to the U.S. and the port congestion that results contributes to the higher rates that we're seeing.
David Maloney, Editorial Director, DC Velocity 18:04
Victoria, is there anything that companies can do to alleviate those high costs?
Victoria Kickham, Senior Editor, DC Velocity 18:08
Yeah, book cargo transportation early, according to this report. They say that will give loads more time to reach their destination, and at lower cost. This is something industry experts often tell us can be very helpful. The report also points to which ports are experiencing the most congestion and where spot rates are expected to surge the most, which can also be helpful information. The June 2022 forecast found that the ports of Los Angeles and Long Beach, Vancouver[, Washington], and New York/New Jersey are the most congested in the United States, and that the Northeast, Southeast, and Pacific Northwest are predicted see the highest drayage rate increases, at more than 30%. So, just one more example of the, how the costs of doing business just seem to keep climbing.
David Maloney, Editorial Director, DC Velocity 18:56
Yeah, and I'm sure, and it's difficult for any shipper to really avoid those busy ports and look to others, so I guess we just expect that we're going to pay more for it.
Victoria Kickham, Senior Editor, DC Velocity 19:06
Yeah, unfortunately.
David Maloney, Editorial Director, DC Velocity 19:07
Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 19:08
You're welcome.
David Maloney, Editorial Director, DC Velocity 19:10
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. And be sure to check out the podcast Notes section for some direct links on the topics that we discussed today.
And again, our thanks to Alex Saric of Ivalua for being our guest today. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday. And speaking of subscribing, we encourage you to check out our new sister podcast series Supply Chain in the Fast Lane. Coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. Subscribe to Supply Chain in the Fast Lane wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by Rite-Hite. How are you helping to keep your workers on the dangerous drive approach safe? Approach-Vu from Rite-Hite detects backing motion in the driver approach, and presents an immediate clear, audible and visual warning to pedestrians in front of the loading dock. For more information, visit RiteHite.com That's RiteHite.com.
We'll be back again next week with another edition of Logistics Matters, when we'll discuss the work being done to promote safe operation of forklifts and the annual recognition of National Forklift Safety Day. Be sure to join us. Until then, have a great week.
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