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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
Newly proposed climate rules and their impact on supply chains. The Postal Service fights back. And industrial racking enjoys a growth spurt.
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 Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by TGW. TGW is a leading global systems integrator for automated warehouse solutions. They're a one-stop provider, designing, manufacturing, implementing, and maintaining end-to-end fulfillment solutions for URBN, Gap, Jasco, TVH, and more. Distribution network management is becoming all the more challenging. Master the unpredictable with TGW, a leading global systems integrator. Visit tgw-group.com for more information.
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: many may not be aware, but new climate-risk disclosure rules may soon go into effect, and they could have some significant effects on supply chains. To find out the details of what they all mean, here's Victoria was today's guest. Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:27
Thanks, Dave. Our guest today is Alex Saric. Alex is chief marketing officer at procurement software firm Ivalua, and as you say, he's here to discuss proposed SEC climate-risk disclosure rules and their impact on supply chains. Welcome, Alex.
Alex Saric, Chief Marketing Officer, Ivalua 01:43
Thanks for having me.
Victoria Kickham, Senior Editor, DC Velocity 01:45
So the Securities and Exchange Commission's proposed climate-risk disclosure rule could have far-reaching effects across the supply chain. As I understand it, it requires publicly traded companies to disclose to investors how their operations affect the climate and contribute to carbon emissions. Can you explain what this is all about, when the rules may take effect, and tell us what your role is in helping people understand this?
Alex Saric, Chief Marketing Officer, Ivalua 02:10
Sure. So there's been growing interest in emissions coming from business, and both as far as their impact on the environment, and also the potential risks of the business results themselves, but there really hasn't been any consistent standards for measuring or reporting on emissions, and that's led to a lot of confusions, inconsistencies, and also a lot of claims of greenwashing. So, the SEC rules are really intended to address these concerns, most notably by, one, mandating that all public companies report their total emissions, and then second, defining standard metrics for them to do so. I think it's important to note that it's not setting specific targets or any kind of fines for certain thresholds. This is really just about transparency. The rules were aimed to take effect as early as March, so they've been shifting around quite a bit. There's still some limbo on it, and as of right now, it could potentially kick in April or even later. There's just ongoing review of some of the public commentary to the initial SEC guidelines that they published, and there's some legal challenges, that have also been holding it up from having a definitive date. And my company Ivalua, we provide a cloud-based platform that helps businesses manage their spend and their suppliers, helps with a range of objectives from improving supply resilience, profitability, and compliance by improving visibility into and collaboration with the supply chain. But when it comes to ESG, and carbon emissions specifically, we have an environmental impact center. It helps companies identify exactly what they buy, pulling third-party information such as carbon emission factors, so they can baseline where they are today, set targets, and then work with suppliers to actually lower them over time.
Victoria Kickham, Senior Editor, DC Velocity 03:47
Great, thank you. Can you provide some, maybe a little bit of specifics about how it will affect you know, companies up and down the supply chain, our listeners and readers? And I believe it kind of gets into the so-called Scope three emissions, those come into play here. Can you talk a little bit about those as well?
Alex Saric, Chief Marketing Officer, Ivalua 04:06
Yeah, absolutely. And it's important to understand that this is actually going to affect businesses of all size[s, not just public companies, and to do that, to really understand how, it really comes down to three types of business emissions — the categories that are involved in the SEC rule. There's a Scope 1 emissions, and that's what a company produces directly through its own operations, and there's Scope 2, which are what a company causes indirectly, through the energy that it purchases. The first and second can be handled by the companies themselves, but where it gets tricky is the Scope 3, and while the rules officially only apply to public companies, Scope 3 emissions include emissions from the full depth of the supply chain, everywhere from resource extraction to production and transport, and for the average business Scope 3 actually reflects over 70% or so of their emission, so any serious assessment with business has to include the supply chain. Before business can be able to report a Scope 3 emissions, it has to require suppliers to provide details of their own operations and out of their own supply chain, regardless of their supplier size. So, in effect, that means that businesses of any size are going to have to assess and report on emissions to some extent.
Victoria Kickham, Senior Editor, DC Velocity 05:16
So this is designed, it sounds like, to help people, obviously, you know, or give some guidance in terms of how to do this. What are some of the most important aspects of sort of tracking, measuring, and managing this information, and who should be doing it in a company?
Alex Saric, Chief Marketing Officer, Ivalua 05:31
So, there are a few key elements, and it really starts with, first, just knowing who all the businesses suppliers are — which sounds really basic, but the reality is, most public companies don't actually know who all their suppliers are or everything that they purchase. So, they first have to get control of that. Then they need to have visibility into the sub-tier, so who their suppliers are dependent on to provide them the goods and services that they're purchasing. That's the real foundation. And then you get into the crux of it, which is needing to assess emissions at the category and the supplier and the product level, so you can report on it, you can identify the high-emitting categories and suppliers; develop and execute on collaborative savings plans, carbon savings plans, with those suppliers; and drive more sustainable buying behavior, with things like low-carbon options added to catalogs. And as far as who really needs to drive this. procurement really plays a critical role in executing, because it's really the function that's the linchpin to the suppliers. So they're absolutely essential in a successful effort.
Victoria Kickham, Senior Editor, DC Velocity 06:32
Can it be tracked in management in an ERP system or similar? So, if you're a company, you're a supplier, you're going to be asked for this kind of information. How do you kind of get a handle on that?
Alex Saric, Chief Marketing Officer, Ivalua 06:43
So, it's not really something that the ERP systems can service. You know, they really work as the critical kind of financial, and in some cases, like for manufacturers and planning systems, but they're inherently inward-focus, internal-focus systems, so they don't really suffice for this kind of reporting that really needs to look outside the organization. And that's why you see companies are relying on specialists and spend supplier-management platforms like Ivalua can do this. These type of platforms serve as the supplier backbone for an organization like ERPs do for their financials. So, they manage all the reporting and engagement with suppliers, which is what's really needed to assess, monitor, and reduce carbon emissions.
Victoria Kickham, Senior Editor, DC Velocity 07:25
So, proposals like this are often controversial, and I think that's been the case here, with the limited research I've done on this. What has the industry reaction been thus far, you know, from, from your perspective, and in dealing with it with your clients?
Alex Saric, Chief Marketing Officer, Ivalua 07:39
Yes, well, so far, what we've seen is a generally positive reaction, with a couple of key areas of concern. I think it's positive in that, you know, finally providing some consistency in the metrics to be used, which have really been all over the place, and that creates a lot of frustration for companies as well as people trying to assess them. And there's general agreement that reporting on Scope 1 and 2 are both valuable and achievable. The concern is really focused around the Scope 3 issues, because it's not fully been in the company's control. I mean, very few organizations really have transparency into every one that they buy from, like I mentioned, and they're going to require input from their suppliers that are not themselves obligated to report emissions, and may not be that savvy at doing so. So, effectively, businesses are going to be held liable for reporting that they can't fully control. And in particular, there's been pushback on one of the stipulations here, which is the need to report on any source of emissions totaling 1% or more of the total. That's a real concern, and a lot of the criticism is that that's too low a threshold, and there's also been some criticism about not having enough time to adapt, and the processes and systems to comply, and they're asking for more time.
Victoria Kickham, Senior Editor, DC Velocity 08:49
Do you think this change will help improve efforts by supply chain companies — I'm talking across the supply chain — to reduce carbon emissions and really become better stewards of the environment? It sounds like it's a step in that direction, but I'm just wondering if you think, if it goes through as planned, is that where you hope it ends up?
Alex Saric, Chief Marketing Officer, Ivalua 09:07
I do. I think it's definitely moving — what it will do is, it's going to move carbon emissions reporting from really a nice-to-have to a must-have for organizations, and that's automatically going to move up the board-level list of priorities. And that's going to help drive investment in the right systems, the talent, and the processes to make it happen. So ultimately, I think it'll be beneficial. Hopefully, they can come up with something that's achievable and palatable.
Victoria Kickham, Senior Editor, DC Velocity 09:32
Alex, thank you so much for being with us today. We really appreciate your insight on this topic.
Alex Saric, Chief Marketing Officer, Ivalua 09:38
No problem. It's great to be on as always.
Victoria Kickham, Senior Editor, DC Velocity 09:40
Thank you. We've been talking with Alex Saric of Ivalua. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 09:46
Thank you, Alex and Victoria. Now let's take a look at some of the other supply chain news from the week. And Ben, you reported this week on efforts by the Postal Service to rein in fraud. Can you share the details?
Ben Ames, Senior News Editor, DC Velocity 09:59
Yeah, glad to. Really, anyone who uses the Postal Service is familiar with what happens when you make a mistake on the address or maybe the amount of postage, the stamps you put on a box. You know, the service just marks it "Return to sender" and brings it back, and, you know, we've all made that mistake, I think. You know, maybe you didn't realize a friend had moved or you put a postcard stamp on a letter or something like that. But this week, we learned that the USPS is struggling with a related kind of challenge, but it's a surge in the use of counterfeit postage. So, that's been rising in recent years, apparently, and the post office now says that it's planning to fight back. It says fake postage is an intentional effort to defraud the Postal Service of the funds that it needs to provide services to the public. So that makes sense, because you know, they didn't pay for this parcel to be carried and delivered. USPS is a government agency, of course, so yesterday, it filed a notice in the Federal Register about this change. What it said is that when USPS finds an item with fake postage, it will not deliver it to the address or return it to the sender, but rather it'll treat it as abandoned. And what that means is that the package might be — it can be opened and disposed of at the Postal Service's discretion.
David Maloney, Editorial Director, DC Velocity 11:20
That's interesting, and, of course, in this e-commerce age, we all receive a lot of parcels in the mail. So, what does this mean for the customers who are expecting a delivery, maybe by an commerce company that they bought something from?
Ben Ames, Senior News Editor, DC Velocity 11:34
Great question. That's what came to mind. The Postal Service says — they dressed that specifically, and they said that consumers would simply lose any online items that they had purchased that were falsely mailed. And that they would have to, quote, seek recourse from the vendor. So that means they'll have to call up the person who sold it to them and complain to to the vendor there. The Postal Service did not share statistics on how many packages and parcels we're talking about here, but in its filing with the Federal Register, it said that the use of counterfeit postage has increased substantially, and that was especially on packages. So, this is more about, you know, parcels than letters. [The Post Office] said that typically, one of the challenges here is that those boxes with fake postage,do not actually have a valid return address. They're either purposefully inaccurate, or maybe it's a return address that's not related to the true mailer, so they couldn't return it anyway. But finally, they said the service, what they're proposing to do to make the change would be beginning on April 1, so that's, you know, only six weeks away or something here. So, keep your eyes on on those packages. If they don't arrive. It won't be an April Fool's joke. It looks like this could be the new policy.
David Maloney, Editorial Director, DC Velocity 12:52
Yeah, it certainly does seem that way, and I guess it just emphasizes the need to have tracking information available on packages so you can locate where, what happened to it and go back to the source if necessary.
Ben Ames, Senior News Editor, DC Velocity 13:04
Exactly. That'd be good advice.
David Maloney, Editorial Director, DC Velocity 13:06
Ben Ames, Senior News Editor, DC Velocity 13:07
David Maloney, Editorial Director, DC Velocity 13:08
And Victoria, you wrote this week about the growing demand for industrial racking. What are the outlooks for the market for the next few years?
Victoria Kickham, Senior Editor, DC Velocity 13:17
Yeah, Dave, that's right. So, although logistics industry growth is set to moderate this year, reports show that demand for industrial storage racks will remain on the upswing over the next few years. The market for industrial racking systems is set to grow from $11 billion last year to 16 billion by 2029, a roughly 6% compound annual growth rate, and that's according to market research from a company called Fortune Business Insights. They actually released that data last year — late last year. Global demand for warehouse space has been driving the trend, and that's especially prevalent here in the United States, where accelerating e-commerce activity has spurred the need for more modern warehouses and distribution centers.
David Maloney, Editorial Director, DC Velocity 14:00
"Modern" seems to be a key word there. How does that figure into demand for storage racks?
Victoria Kickham, Senior Editor, DC Velocity 14:06
Yeah, that's right. Well, it reflects the move toward more modern facilities that incorporate robotics and automation in particular. The report cites technology advances and demand for automated warehouses as key drivers of industrial rack growth. If you think about it, new project implementations these days often require racking for automated storage and retrieval systems, as one example, and there's also demand for storage rack systems that can integrate with other types of robotic solutions. I'm actually working on a story for this about this for upcoming issue of DC Velocity, and I've been speaking with rack manufacturers and others about demand for more flexible rack solutions that integrate seamlessly with today's automated warehouses. This is the case in all industries, but the story will look at some examples from the pharmaceutical and healthcare markets. That story will appear in our April issue, so readers interested in this topic can check that out. In the spring.
David Maloney, Editorial Director, DC Velocity 15:01
That sounds good, Victoria. Thank you.
Victoria Kickham, Senior Editor, DC Velocity 15:03
David Maloney, Editorial Director, DC Velocity 15:05
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. And also 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 firstname.lastname@example.org.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
Speaking of subscribing, check out our sister podcast series. It's called Supply Chain in the Fast Lane. It's available wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by TGW. TGW is a leading global systems integrator for automated warehouse solutions. They're a one-stop provider, designing, manufacturing, implementing, and maintaining end-to-end fulfillment solutions for URBN, Gap, Jasco, TVH, and more. Learn more about how to improve your supply chain operations by visiting TGW at ProMat this March in Booth #S1503.
We'll be back again next week with another edition of Logistics Matters. Be sure to join us. Until then, have a great week.
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