SupplyChain Magazine – November 2023 by Supply Chain Digital

November 2023 | supplychaindigital.com

FASTEST GROWING BUSINESSES

ESG COMPLIANCE IN WORLDWIDE SUPPLY CHAIN

ARE YOU ON TOP OF THE CHANGING REGULATIONS?

BLOCKCHAIN BREAKTHROUGH

Why blockchain is vital to managing sustainability risk in the supply chain

DIGITAL REVOLUTION

Digitalisation is reshaping the future of procurement

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The SupplyChain Team EDITOR-IN-CHIEF

SEAN ASHCROFT

FEATURE DESIGNERS

CHIEF CONTENT OFFICER

SCOTT BIRCH

JULIA WAINWRIGHT VICTORIA CASEY EMMA WALLER

MANAGING EDITOR

ADVERT DESIGNERS

NEIL PERRY

MATT JOHNSON

DANILO CARDOSO CALLUM HOOD ADRIAN SERBAN

HEAD OF DESIGN/ SUPPLYCHAIN LEAD DESIGNER

VIDEO PRODUCTION MANAGER

CHIEF DESIGN OFFICER

ANDY WOOLLACOTT SENIOR DESIGNERS

SAM HUBBARD REBEKAH BIRLESON

KIERAN WAITE

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ERNEST DE NEVE THOMAS EASTERFORD DREW HARDMAN SALLY MOUSTAFA PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

JANE ARNETA MARIA GONZALEZ YEVHENIIA SUBBOTINA KENDRA LAU

MARKETING MANAGER

KATHRYN WEBB

PROJECT DIRECTORS

STUART IRVING JAMES BERRY

MEDIA SALES DIRECTOR

JAMES WHITE

MANAGING DIRECTOR

LEWIS VAUGHAN CEO

GLEN WHITE

FOREWORD

SHINING A LIGHT INTO THE MURKY DEPTHS OF SUPPLY CHAIN STAYING AHEAD OF SUPPLY CHAIN ESG TRANSGRESSIONS IS A NEVER-ENDING – BUT SUPREMELY IMPORTANT – CHALLENGE FOR BUSINESSES

“Most ESG problems occur in the shadowy depths of supply chain, beyond the reach of data-driven solutions” ON THE COVER: Business battle to comply with new supply chain laws and regulations CREDIT: DANIEL BEREHULAK/ GETTY IMAGES

SUPPLYCHAIN DIGITAL MAGAZINE IS PUBLISHED BY

This month’s cover image brings one uncomfortable truth about supply chain into sharp focus: the closer you get to the extraction of raw materials, the greater the chance you will find ESG transgressions. Forced labour, child workers, pollution, the destruction of precious resources. Most of it occurs in the shadowy recesses of the supply chain, beyond the reach of data-driven solutions. Things are changing, though. Technology is undoubtedly helping, as is the ever-evolving supply chain regulatory landscape, which increasingly means that ESG transgressions – whether intentional or unintentional – can have disastrous consequences for a business, reputationally and financially. Yet many companies have neither the technical resources nor human capital needed to comply with new and evolving regulations. That’s why in this issue, we explore this problem in depth with EcoVadis, a global provider of sustainability ratings and assessments for companies. We hope these insights throw at least a little light on what can be an extremely complex area.

SEAN ASHCROFT

sean.ashcroft@bizclikmedia.com

supplychaindigital.com

CONTENTS UP FRONT 012 BIG PICTURE

012

Supply insight and advice

014 LIFETIME OF ACHIEVEMENT

Rockwell Automation CEO Blake Moret

018 INTERVIEW WITH Körber recently appointed Jason Russell as its new CFO for its Supply Chain Business Unit

020 THE MONTH THAT WAS

014

028

018

FASTEST GROWING BUSINESSES

NOVEMBER 2023

068

FEATURES 028 TOP 10

Top 10 businesses

042 SUPPLY CHAIN

Why blockchain is crucial to managing sustainability risk in supply chain

056 SELLAFIELD

Eirini Etoimou showcases how Sellafield operationalises sustainability

056

Eirini Etoimou Head of Corporate Sustainability & Supply Chain Development at Sellafield Ltd

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Smart business buying starts here Streamline purchasing while saving on everyday supplies so you can focus on growing your business.

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NOVEMBER 2023

068 068 LOGISTICS

Logistics hubs helping bring supply chain resilience

078

078 SUSTAINABILITY

Business battle to comply with new supply chain laws and regulations

090 TECH & AI

Digital revolution is reshaping the future of procurement

090 supplychaindigital.com

CASE STUDY

Turn Rebates into an Engine For Growth Hear the challenges ERIKS faced with rebates and why they chose Enable to support their rebate management process

ERIKS, a leading industrial service provider with a global presence and a €1.9 billion turnover, embarked on a journey to enhance their customer rebate management processes. Recognising the complexity and challenges in managing B2B customer rebates across various countries, suppliers, and formulas, ERIKS partnered with Enable, a specialised rebate management company, to simplify and optimise their approach. Stijn van Roosmalen, European Procurement Director at ERIKS, spearheaded this initiative as part of the broader goal to improve their relationships with suppliers and overall service delivery. ERIKS faced several challenges prior to adopting Enable’s solution. They operated with multiple ERP systems, diverse rebate calculation formulas, and manual processes that introduced room for error. Stijn aimed to streamline their

processes, focusing on factors like quality, delivery performance, and compliance. Stijn described the intricacy of their rebate management: “There’s a huge focus and huge investment trying to bring that together. But if you look at different countries, different ERP systems, a whole lot of suppliers, and then also, again, different formulas where the rebates and bonuses are calculated upon turnover or more on growth, etc., it’s a very complex task.” Their manual efforts to gather and verify data from suppliers were time-consuming and error-prone. ERIKS recognised the need for a system to support their rebate management. Stijn’s expectations were met when Enable’s solution not only reduced manual efforts but also uncovered additional revenue: “The software has already paid for itself. During rebate settlements at the end of 2021, we disputed a rebate, which landed us a higher band and netted us an additional €200k.”

ERIKS selected Enable after a thorough evaluation process, praising Enable’s team for their dedication to onboarding and customer focus. With Enable’s rebate management software, ERIKS gained daily insights into rebate status, eliminating the need for annual or biannual reconciliation. They can now act proactively based on real-time data, reducing workload and capitalising on tangible benefits. Stijn emphasised the impact of Enable’s solution: “We can also now act upon that, so it should not only reduce workload but also really tangible monetise benefits.” ERIKS achieved higher rebates by strategically placing additional orders to meet threshold requirements, resulting in increased revenue. By using Enable as a centralised source for managing rebates, ERIKS anticipates even more significant insights and optimisation opportunities. They can

track and optimise rebate programs, strengthening their supplier relationships and improving stakeholder interactions. In conclusion, ERIKS successfully overcame the challenges of managing complex B2B customer rebates with Enable’s specialised rebate management software. Their proactive approach has not only streamlined processes but also uncovered hidden revenue streams, making their future in rebate management look promising.

Try Enable Rebate Management With our platform, you can take control of your rebates and leverage them to drive growth, returns, and more opportunities. Request a Demo

BIG PICTURE

November 2023

Supply insight & advice London, UK The world’s fastest growing procurement and supply chain event recently took place at the Business Design Centre, in Islington. Procurement & Supply Chain Live London showcased some of the industry’s top speakers across innovation, thought leadership and strategy. To register for next year’s event, click here.

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Rockwell Automation Chairman and CEO

BLAKE MORET Rockwell Automation CEO Blake Moret leads the largest industrial automation company in the world, and is passionate about sustainability

November 2023

Over his 38 years at Rockwell, Moret has seen a huge rise in sustainable manufacturing and is racing to meet it across the company.

SUSTAINABLE EFFORTS IN THE WORKPLACE AND THE WORLD

Rockwell – along with many other manufacturers – suspended operations and sales in Russia and Belarus following the invasion of Ukraine. Though sales in these countries total less than 0.5% of its total revenue, the company has said it will continue to pay salaries and benefits for its Russian team. “Rockwell joins the US government and the global community in condemning Russia’s attack on Ukraine and its citizens,” Moret said at the time of the invasion.”

CREDIT: wikipedia.org/Rockwell Automation/Sara Stathas

utomation in the supply chain is becoming ever-more critical, and one of the biggest players in the global market is Rockwell Automation, the largest company in the world dedicated to industrial automation and information. Rockwell’s mission is “to accelerate the quality of life through more efficient production, smart manufacturing and sustainable options”. The company’s maxim is that “an investment in our technology is an investment in the future of manufacturing”. The man charged with delivering on this vision is Blake Moret, who became President and CEO of Rockwell in 2016. In this role he leads productivity and sustainable initiatives.

LIFETIME OF ACHIEVEMENT

“An investment in our technology is an investment in the future of manufacturing” supplychaindigital.com

Following up on this, the company made a donation to Project HOPE, which offers humanitarian aid to Ukrainian refugees, and also matched employee donations for Project HOPE, while supporting other local volunteer efforts. At Rockwell, Moret is prioritising sustainable initiatives. “Manufacturers are looking for new ways to leverage technology to reduce their environmental footprints,” he has said. “Intelligent devices, combined with innovative sustainability and energy management software, provide new levels of insight to reduce energy demand and increase efficiency.” Moret believes real-time energy management is within reach, from monitoring to embedded AI tools that offer closed-loop optimisation. In using a standard energy data model, he hopes “that energy intensity and other key performance metrics can be measured and improved”.

November 2023

“This simple, yet impactful, insight allows businesses to de-energise the equipment when not in use, reducing both costs and greenhouse gas emissions,” he says. Moret is a graduate of Georgia Institute of Technology, where he studied Mechanical Engineering, after which joined Rockwell, working across sales and business management roles until 2002. From then, up until 2005, he worked as Director of Electronic Operator Interface Business, then moved to Customer Support and Maintenance until 2007, where he led the control products and solutions across Rockwell’s business segment. Up until 2011, Moret worked as VP. He was then promoted to President and CEO in 2016, and Chairman and Chief Executive Officer in 2018. Moret also served as Chair of the Board for the Manufacturing Institute of the National Association of Manufacturers, and is a member of the Board of Directors for the Urban Ecology Center. He is also on the Board of Directors of the United Way of Greater Milwaukee and Waukesha, and is also on the Advisory Board of the Woodruff School of Mechanical Engineering at Georgia Tech.

LIFETIME OF ACHIEVEMENT

WATCH NOW

“Real-time energy management is within reach, from monitoring to embedded AI tools that offer closed-loop optimisation” supplychaindigital.com

INTERVIEW WITH...

JASON RUSSELL Körber recently appointed Jason Russell as its new CFO for its Supply Chain Business Unit. Here, he outlines his new role CAREER PATH TO KÖRBER?

» Prior to my appointment as Chief

Financial Officer, I joined Körber in 2022 as Executive Vice President Strategy & Corporate Development for the supply chain software business. In this previous role, I supported the executive leadership team in leading mergers and acquisitions (M&A), global business development, and implementation of corporate growth strategy across geographies.

WHAT DOES YOUR NEW ROLE ENTAIL?

» As the newly appointed CFO,

I’ve assumed a critical leadership role in charting the growth trajectory of Körber’s supply chain software business. Leveraging my deep understanding of the company’s values and operations, I will be driving the growth of the business

November 2023

through corporate planning, M&A and global strategy while also overseeing the accounting and legal functions.

HOW CAN YOU BEST MEET CUSTOMER’S SUPPLY CHAIN NEEDS?

» Today’s supply chains play a

central role in creating a great customer experience and driving customer loyalty – which means retailers, manufacturers and logistics service providers need to run at peak performance to meet rising consumer expectations. This is not easy to achieve. To satisfy increasing consumer requirements, companies must manage more extensive inventories and increasingly complex systems to process rising order volumes and manage a variety of fulfilment options and services.

“ For us, leadership means making a material contribution to a sustainable future”

supplychaindigital.com

INTERVIEW WITH...

“Ideation and innovation have always been pillars of Körber’s success” Körber solutions can be found at

4,500 sites across the globe

Körber Supply Chain Software helps solve these complex issues for clients with our end-to-end supply chain software solutions that empower our clients to overcome obstacles, achieve operational excellence and drive sustainable growth. The success of businesses to serve the end customer is at the heart of what Körber does.

HOW INNOVATIVE IS KÖRBER SUPPLY CHAIN BUSINESS UNIT?

» Ideation and innovation have always

JASON RUSSELL TITLE: CFO, SUPPLY CHAIN COMPANY: KÖRBER Russell has extensive experience advising clients across the technology, industrial and services landscape. He specialises in sectors that are going through digital transformation with a focus on software and technology for supply chain.

November 2023

been substantial pillars of Körber’s success. We choose to think bigger, plan for the long term and act faster. We choose to seize the possibilities, and only a culture of innovation can help achieve all this. That is because technology is not an end in itself. It supports companies in changing today for a better tomorrow. We help companies be better prepared to mitigate peaks and disruptions and introduce safe and ergonomic work environments while also consulting on the various ways of building sustainable supply chain practices. For us, technological leadership means making a material contribution to a sustainable future, where we still see a

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lot of potential for innovation. Körber is the trusted technology provider for thousands of companies worldwide. That applies in particular to the development of innovative solutions. A good example is our Unified Control System, which addresses the orchestration of mixed software and automation portfolios that require greater capabilities than most traditional warehouse control systems can provide. We invest heavily in R&D, as innovation is at its core throughout Körber. Currently, our solutions can be found at 4,500 sites across the globe.

HOW CAN FIRMS OPTIMISE RESOURCE ALLOCATION ACROSS THE SUPPLY CHAIN?

» At a macro level, we are seeing a

major shift towards digitalisation. That’s the first step in optimising resource allocation, as data can be used to make better decisions. Secondly, invest in technologies that complement

existing resources and the skills of warehouse workers safely. Warehouse Control Systems (WCS) are often underestimated, with just 5% of warehouses employing robotics and automation. Automated technologies significantly enhance warehouse efficiency. WCS empowers facility managers to focus on system improvements rather than troubleshooting, underscoring its critical role in streamlining operations.

ADVICE TO YOUNGER SELF?

» Small, positive changes in your daily

habits are the key to long-term success and improvements. Plus, invest in relationships and keep track of your contacts. We live in a fastpaced world and it’s easy to lose touch with people. Take a minute to drop your old colleague a message on LinkedIn or send a WhatsApp message to your university friend, as who knows what that might spark.

supplychaindigital.com

THE MONTH THAT WAS

CALIFORNIA SCOPE 3 LAW HAS US SUPPLY CHAINS ON CARBON ALERT California’s state Senate has approved a bill requiring large companies to report their carbon footprints, putting more pressure on them to clean up their supply chains. The Emissions Disclosure Mandate Bill was supported by several large companies but opposed by others for the exacting demands it places on organisations. READ NOW

SUSTAINABILITY ‘ON SLIDE IN AUTOMOTIVE INDUSTRY’ – CAPGEMINI Sustainability efforts are faltering in the automotive supply chain, according to a report from Capgemini’s think tank. It also found automakers are bringing operations closer to home, with Europe leading the way. It found that successive supply chain crises have sapped automakers’ time and diverted focus and investment away from sustainability initiatives. READ NOW

November 2023

SIMPLIFIED EU ARMS PROCUREMENT DEAL A BOOST FOR UKRAINE

The European Defence Agency (EDA) has rubber-stamped eight framework contracts with European manufacturers for the joint procurement of ammunition for Ukraine. The deal marks the first time the EDA has jointly procured ammunition in support of Ukraine. The EDA is an intergovernmental platform to support and facilitate the defencerelated activity of EU READ NOW member states.

UK POLICE CYBERATTACK STARK REMINDER OF VENDOR VULNERABILITY

News that the UK’s largest regional police force, the Metropolitan Police, has been the subject of a supply chain cyber attack is yet another reminder to organisations that third-party vendors remain a huge area of cyber vulnerability. READ NOW

CARGILL AND BAR COLLABORATE ON WIND POWER Cargill and BAR Technologies’ ground-breaking innovation, BAR Tech WindWings by Yara Marine, is testing new technology that will bring cutting edge wind propulsion to commercial shipping supply chains for the first time. READ NOW

SUPPLIER DIVERSITY KEY TO SUSTAINABLE FUTURE, SAYS INFOSYS

“In the context of sustainability, supply chain diversity and inclusion play a pivotal role. By embracing a diverse and inclusive supply chain, organisations foster innovation, creativity and resilience. It brings with it ideas and solutions that can help address complex sustainability challenges.” ANDREA HENDRICKX,

COUNTRY HEAD, GERMANY INFOSYS. READ NOW

supplychaindigital.com

Supplier relationship management designed for the future Kodiak Hub is a one-stop shop for supplier management and takes strategic sourcing to the next level As an intuitive SRM solution, Kodiak Hub offers complete visibility and insights into crucial aspects in the supply chain, ranging from performance tracking, spotting risk, to ESG progress.

“When the most influential figure within the entire supply chain makes a conscious choice to incorporate stakeholder value into the equation, transformation will happen” Schmidt continues.

Founder & CEO of Kodiak Hub, Malin Schmidt, says she launched the company because the market needed an intuitive platform that would enable Procurement to forge lasting sustainable impact in global supply chains, but did not require years of consultancy support, yet still met the needs of strategic buyers”.

Systematically measuring supplier performance, says Schmidt, allows organisations to set strategic expectations and to apply KPI criteria to suppliers.

Schmidt’s guiding principle is that, to unlock the full value from global supply chains, effective supplier relationship management is key. She adds: “Short- and Long-term value can be achieved only with transparent relationships between suppliers and buyers, where performance and impact goals are shared”. The most powerful individual in the entire supply chain is the strategic buyer,” she says. Kodiak Hub is designed to empower procurement professionals to be the best versions of themselves.

She stresses that a prerequisite of all data analytics, AI and ML is “large amounts of data”, and that this is what can take strategic buying to the next level. “Many companies waste data points readily available to them,” she says. “They are missing out on powerful supplier insights, and predictive analytics on the likely future performance of any given supplier.” Schmidt adds: “ We work with a wide data-scope that includes not only thirdparty and ERP data but also data that is normally lost or not used, such as that found in any reports or data that is entailed in collaborating with the supplier.

supplychaindigital.com

TOP 10

FASTEST GROWING BUSINESSES IN 2022-23 Fastest growing businesses in 2023 include Daqo New Energy Corp, Advanced Micro Devices, PennyMac Financial Services and Futu Holdings WRITTEN BY: SEAN ASHCROFT

November 2023

he past few years have seen businesses face a conveyor belt of serious challenges, including the pandemic, rampant inflation, a looming global recession and serious geopolitical instability. The most successful businesses have used these challenges to remodel their business, to bring resilience and growth, with supply chain often being at the heart of their success. Here are 10 organisations who are thriving more than any other in the face of a difficult market. supplychaindigital.com

Himax Technologies

Horizon Therapeutics Annual revenue increase: 12% CEO: Timothy P Walbert

Horizon Therapeutics is a biopharmaceutical company focused on researching, developing, and commercialising medicines that address critical needs for people impacted by rare and rheumatic diseases. It says that senior executives “meet frequently to plan, monitor and continually improve product supply, and that the company’s Supplier Review Board “periodically reviews the performance of all suppliers”. 30

November 2023

Himax is a semiconductor company, providing display imaging-processing technologies in China, Taiwan, the Philippines, Korea, Japan, Europe, and the United States. It is a so-called ‘fabless’ chipmaker, which means it produces semiconductors for use in various types of electronics, such as digital cameras, smartphones, and smart cars. The company strives for a sustainable supply chain by having strict due diligence with suppliers to ensure that none of the minerals it uses in the manufacture of chips is sourced from the Democratic Republic of Congo, which has been riven with conflict in recent years. The company has also committed to creating a supply-chain transparency system around this.

CREDIT: HIMAX TECHNOLOGIES

CREDIT: GETTY

Annual revenue increase: 25% CEO: Jordan Wu

TOP 10

Atlanticus Holdings

Palomar Holdings

Annual revenue increase: 25% CEO: Mac Armstrong Palomar is a specialty insurance company focused on serving residential and commercial customers. It uses analytical expertise to focus on underserved areas, such as earthquake insurance. Of its supply chain, it says: While the carbon and environmental footprint of Palomar might be smaller than larger corporations with extensive supply chains and manufacturing infrastructure, we believe every company, regardless of size or industry, should commit to responsible environmental stewardship and sustainability.”

Atlanticus Holdings Corporation is a fintech company that targets the underserved consumer credit market through fintech and related services. Its tech-based solutions allow bank partners to integrate its paperless process and instant decisioning platform with the existing infrastructure of participating retailers and service providers. The company says that “despite inflation, rising interest rates and supply chain interruptions” its products are “continuing to generate, attractive returns on assets that will support attractive returns on equity”, and that it “plans to pursue growth in this area”.

CREDIT: ATLANTICUS HOLDINGS

CREDIT: PALOMER HOLDINGS

Annual revenue increase: 32% CEO: Jeff Howard

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TOP 10

Enphase Energy

Enphase Energy is an energy technology company that designs, develops, manufactures and markets home energy solutions that manage energy generation, energy storage and communications. It manufactures IQ batteries, which is an all-in-one AC-coupled storage system that helps households save on electricity consumption. It continues to post strong revenue growth, due to the surge in demand for batteries, it has added extra capacity to its facilities in Mexico and India.

CREDIT: FLEX LNG

Annual revenue increase: 34% CEO: Badri Kothandaraman

FLEX LNG

CREDIT: ENPHASE ENERGY

Annual revenue increase: 36% CEO: Oystein M. Kalleklev Flex LNG Fleet Management is focused on offering safe, reliable, and cost effective solutions for the LNG (liquefied natural gas) shipping industry. At the supply source of the transportation chain, liquefaction is done at specialised liquefaction plants, known as ‘liquefaction trains’, where waste hydrocarbons and nonhydrocarbons are removed from the natural gas before cooling the natural gas to become liquid. The LNG market size is currently US$74.60bn in 2023 and is expected to reach $103.41bn by 2028. supplychaindigital.com

Futu Holdings

Annual revenue increase: 37% CEO: Leaf Hua Li Futu Holdings is an advanced fintech company upgrading the investing experience by offering fully digitalized financial services in multiple markets. It offers market data, financial news, interactive social features, and investor education on its proprietary onestop digital platforms, Futubull and moomoo. Fintech companies such as Futu are streamlining payments through digital technology, making it easier and more cost-effective for businesses to manage their supply chains.

PennyMac Financial Services

CREDIT: FUTU HOLDINGS

Annual revenue increase: 40% CEO: David A. Spector

November 2023

PennyMac is an American residential mortgage company headquartered in California. Its core business is the production and servicing of US mortgage loans and the management of investments related to the US mortgage market. It was founded in 2008, during the subprime mortgage crisis. Supply chain management in the financial sector involves managing cash and capital, and there are an increasing number of solutions here, including a tech-enabled service from KPMG and Taulia that helps customers transform their financial supply chain for savings, and to improve supplier relationships.

CREDIT: PENNYMAC FINANCIAL SERVICES

TOP 10

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Advanced Micro Devices (AMD) Annual revenue increase: 44% CEO: Lisa Su

AMD is a semiconductor company, known for designing and developing computer processors and graphics technologies. Keivan Keshvari, SVP Global Operations and Quality at AMD says of the company’s supply chain: “Our longstanding relationships with our supply chain partners enable us to create shared value for our customers, workers across our global supply chain and the communities in which we operate. “We aim to support our suppliers in advancing supply chain resiliency, respect for human rights and environmental sustainability. We are a key part of an extensive global supply chain creating products to advance high-performance and adaptive computing that helps to enable the future.”

Lisa Su, CEO of AMD CREDIT: AMD

supplychaindigital.com

Knowledge Partners

THE TOP 100 COMPANIES IN SUPPLY CHAIN Discover the companies leading the way, setting the pace and inspiring global business change.

READ NOW

TOP 10

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Daqo New Energy Corp Annual revenue increase: 174.50% CEO: Xiang Xu

Daqo is a Chinese company engaged in the manufacture of monocrystalline silicon (mono-Si) and polysilicon (poly-Si), primarily for use in solar photovoltaic systems. The company operates a mono-Si and poly-Si manufacturing facility located in Shihezi, Xinjiang Province, China. Falling costs throughout the supply chain are finally making solar energy

November 2023

feasible on a wide scale and Daqo is well-positioned to consolidate as one of the lowest-cost producers in the world. However, its low costs might not just be down to favourable market conditions; Dago is one of a number of Chinese businesses blacklisted by the US government for suspected use of Uyghur forced labour in its supply chain.

IMAGE: AMAZON

TOP 10

(Above): Silicon crystals, which are crucial for creating the cells on the solar panels maxnufactured by Daqo New Energy Corp CREDIT: GETTY

supplychaindigital.com

COMING SOON

AWARDS 2024 The Global Supply Chain Awards 2024 will be celebrating the very

best in Procurement & Supply Chain with the following categories: Procurement Transformation Award – Digital Supply Chain Award – Global Logistics Award – Supplier Diversity Award – Supply Chain Innovation Award – Supply Chain Sustainability Award – Procurement Technology Award – Procurement Consultancy Award – Future Leader Award – Executive of the Year Award – Project of the Year Award – Lifetime Achievement Award

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November 2023

WHY BLOCKCHAIN IS CRUCIAL TO MANAGING SUSTAINABILITY RISK IN SUPPLY CHAIN Global Blockchain Leader at EY Paul Brody on how Ethereum blockchain is helping change the face of supply chain management WRITTEN BY: SEAN ASHCROFT supplychaindigital.com

SUPPLY CHAIN

In 2022, international shipping alone accounted for nearly 3% of the world’s greenhouse gas emissions CREDIT: GETTY

lockchain technology is becoming an ever-more powerful tool in the field of supply chain risk management, bringing resilience and robustness to organisations. Blockchain works so well in this regard because it enables the peer-to-peer transfer of value – be it be assets, identity or information – without the need for a central intermediary. One of the leading exponents of blockchain solutions in supply chain is Paul Brody, who is Global Blockchain Leader at EY. Brody oversees EY’s blockchain strategy and solutions, and is a prominent advocate for public blockchains and privacy technology. He has also recently published a book on the subject. Ethereum for Business. 44

November 2023

(Ethereum is a decentralised blockchain with smart contract functionality.) The book is a plain-English guide to the world’s largest blockchain. Topics covered include data quality, efficiency, smart contracts, privacy, scalability and supply chain management. It is aimed at executives who want to understand the potential of blockchain for solving real-world business problems. Brody says of the book that he “takes aim at the idea that blockchains are mostly about cryptocurrencies and finance”. He firmly believes Ethereum public blockchain “is the digital glue binding together business ecosystems”. “No firm is an island,” he points out, “and increasingly, the biggest challenge faced by enterprises is synchronising all their business partners and relationships”.

Paul Brody TITLE: GLOBAL BLOCKCHAIN LEADER COMPANY: EY INDUSTRY: PROFESSIONAL SERVICES Before joining EY, Brody held various roles at IBM, including Electronics Industry VP. He began his career at McKinsey & Co in Los Angeles and holds a degree in Economics and a certificate in African Studies from Princeton University.

CREDIT: EY

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Blue Mountains, Australia: Climate change is causing extreme weather, prolonged droughts and increasing bushfiresa CREDIT: GETTY

Few areas of business are more intricate and extensive in nature than supply chain. Managing supply risk boils down to one thing: visibility. You cannot manage, measure nor protect against that which you cannot see. Brody’s book contains compelling case studies and examples of blockchain at work in the supply chain. One of these case studies involves an issue of pressing importance for organisations today: tracking carbon in the supply chains. “Regulators are working globally to start tracking and managing carbon footprints,” says Brody. “The starting points are often cap-and-trade rules that require enterprises to manage their total carbon output with the aim that they adopt more efficient processes.”

Brody points out that although the industrial world is generally driving down carbon emissions there remain significant challenges and gaps. Some of the biggest, he says include: • Migration of carbon-intensive industries, because governments fear that getting tough on large GHG emitters will cause them to move offshore. • Falsified emissions and credits. (Without global standards and inspection services companies can conceal outputs or falsify carbon offsets.) • Double-counted offsets and credits. • Variable tracking methodologies and definitions, which make it hard to compare total emissions for a particular product across geographic or industry lines. • Siloed national and industry tracking systems supplychaindigital.com

SUPPLY CHAIN

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Blockchain tokens map real-world assets Brody says that in terms of managing greenhouse gas (GHG) emissions, Ethereum has key features that can help – notably, tokenisation. Tokenisation in blockchain is the issuing of a blockchain token, which are digital representations of real-world assets. “Not only is tokenisation a useful way of quantifying and moving around assets or liabilities, the smart contracts that are used to define tokens can be established to control which entities can mint new tokens and how they can be moved around,” says Brody. As a result, he says, it’s possible to set up standardised models of emissions and allow only compliant organisations to mint tokens. “Every token for either emissions or offsets can be traced back to an original emitter,” he says. “This ensures definitions are standardised and that only firms with 48

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inspected and verified processes can issue either emissions or offset tokens. Brody points out that other features of blockchain that can help with GHG issues are: • Product and service tokenisation related to emissions and offsets. • Integration of external emissions data for products into the blockchain, allowing them to be tracked around the world. • Data permanence, so that carbon-output reporting by suppliers, when written to the blockchain, will be stored forever, even after the supplying company has come and gone. In the book, Brody also looks at product traceability in the supply chain. Brody says product traceability is one of the first and best use cases with Ethereum because it is simple to implement.

Huangpu District, Shanghai, China: Air pollution CREDIT: GETTY

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SUPPLY CHAIN

South Africa: Flames rise from the flare stack towers at a coal plant CREDIT: GETTY

November 2023

Five uses of blockchain in supply chain management Blockchain tech is revolutionising supply chain management through increased transparency, security, and efficiency. Here are five uses of it in supply chain management. TRANSPARENCY Blockchain technology can provide real-time visibility and tracking of goods and products throughout the entire supply chain, from production to distribution to end consumers. This helps to increase transparency and trust between different parties in the supply chain. PRODUCT AUTHENTICATION Blockchain can be used to verify the authenticity of products and prevent counterfeiting by enabling secure and tamper-proof records of a product’s origin and movement throughout the supply chain. Quality control Blockchain can be

used to track the quality of products as they move through the supply chain, enabling faster identification and removal of defective products, reducing waste and improving customer satisfaction. FINANCE Blockchain can be used to facilitate supply chain finance, providing secure and transparent records of transactions between suppliers, manufacturers, and distributors. SMART CONTRACTS These are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. They can be implemented using blockchain technology to automate and streamline supply chain processes, reducing costs and improving efficiency.

“For most consumer products the value proposition around traceability is in the prevention of fraud and the verification of sources,” he says. “For many other markets traceability provides additional authenticity and an ability for consumers to trace the history of a product.” He adds: “The case for traceability gets firmer as you delve into products like pharmaceuticals, for which counterfeiting are potentially life-and-death issues. “In these cases, the ability to trace bad batches of ingredients down through the supply chain quickly is invaluable.”

Nearly every bottle of beer it makes and sells worldwide now features a QR code for product traceability, located near the neck of the bottle. “Scanning the QR code with your smartphone will take you to a customised web page showing the history of the product and its agricultural origins,” says Brody.

Peroni is a blockchain champion One of Brody’s case studies is Peroni Nastro Azzurro, the Italian brewery, which is one of the world’s biggest users of blockchain traceability technology.

Paul Brody’s book, Ethereum for Business, is available on Amazon, for Kindle or as a paperback supplychaindigital.com

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52 November 2023

SELLAFIELD

Sustainable impact begins with a sustainable mindset AD FEATURE WRITTEN BY: TOM SWALLOW

AD FEATURE PRODUCED BY: GLEN WHITE

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SELLAFIELD

Eirini Etoimou showcases how Sellafield integrates sustainability moving from the ambition to action and to long-term results

here is a misconception that one person can tackle all of the global challenges in an instant. This is especially true with areas of sustainability. The imminent threat of centuries of damage to the planet makes sustainability a very passionate subject, but it is not without its challenges. This is why one of the most critical tasks for some of the most impactful organisations is managing expectations of what their businesses can achieve in the eyes of those that work for them – but also those that look from the outside-in. It is in this sense we can say that the majority still don’t grasp the concept of sustainability whereby one change can cause a chain reaction in a particular direction, albeit related to business or climate, that can alter how the world works. In combining the attributes of the economy and sustainability, we open up a very complex environment, of which all businesses will learn to navigate over the coming years – or so we hope. Some of the most critical industries, namely supply chain and energy, are undergoing great shifts to first de-risk, then decarbonise, with a number of social implications along the way. Facilitating this monumental transition requires passionate people with the ability to listen, learn, and act upon the challenges that come their way – true advocates of, not just sustainability, but ensuring environmental prosperity, social justice, and effective governance.

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Eirini Etoimou Head of Corporate Sustainability & Supply Chain Development at Sellafield Ltd supplychaindigital.com

“ Not everyone is ‘ready’ to listen or to be part of the sustainability journey, but this should not stop us” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

November 2023

Someone with passion and at the same time realism, for sustainability within her sector and beyond, is Eirini Etoimou, Head of Corporate Sustainability & Supply Chain Development and Sourcing at Sellafield Ltd. Etoimou seeks to tackle the challenge at its very core in an industry that is under a watchful eye due to the nature of its nationally important work. As one of the key centres for nuclear engineering management, Sellafield Ltd is tackling the legacy of the past and building a capability for the future. Having spent over two years with the organisation, heading up supply chain development, strategic SRM, and sustainability practices, Etoimou is well

SELLAFIELD

EIRINI ETOIMOU TITLE: HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AND SOURCING LOCATION: UNITED KINGDOM

aware that it is not realistic to make the company more sustainable in a heartbeat, but instead takes a more pragmatic approach to the task – starting with its people. Winning the hearts and minds of the workforce One of the key points that Etoimou makes is about action. Ambiguity around sustainability and the different definitions make people feeling intimidated or reluctant to contribute or even to find out more. Now we’ve all heard the cliche phrase ‘we just need to take action’, but Etoimou’s approach to building sustainability into

Eirini Etoimou is the Head of Corporate Sustainability & Supply Chain Development and Sourcing for Sellafield, and the Chair of the Nuclear Forum of the Institute of Collaborative Working. She holds a MSc in Procurement, Logistics and Supply Chain Management, MBA in Leadership and Sustainability and speaks four languages. In addition, she is a visitor lecturer on sustainability and global sustainable supply chains. Eirini participates as a keynote speaker at UK and international conferences. Additionally, she is an author of academic papers and a contributor to business editions, focusing on sustainability, supply chains, procurement, leadership, business strategy.

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Sellafield Ltd is to transform sustainability from being opaque and complex, to easy, accessible and meaningful for all Sellafield’s people and its partners. There is a realistic approach here, as Etoimou shares: “not everyone is ‘ready’ to listen or to be part of the sustainability journey; but this should not stop us. We can always focus on the ones that want and are ready. We can identify these areas that can deliver quick wins in order to attract some positive attention and gain more advocates, but we should not fall into the trap of ‘short-termism’. There are quick wins, but sustainability is equal to the bigger picture and longterm. It is important to pass this message to everyone in the business that would expect immediate results. 58

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“Considering the nature of our business, and taking a holistic approach, we identified four key focal areas, the interconnectivity of which will allow us to move from ambition to action and to long-lasting results. These areas are aligned supply chains, positive environmental impact, innovative solutions, and motivated people,” says Etoimou. It is not just about working with advocates but ensuring that their missions align with those of the business because, as Etoimou points out, there are some individuals with a passion in sustainability that can work against the effort to strategically move in the right direction. “For me pushing back sustainability is equally a problem with the obsessive passion,” says Etoimou. She continues: “In the sustainability journey, we need to work

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together. Everyone may have an idea or a thought, but quick, opportunistic raids, won’t help anyone. Sustainability requires structure and focus. Everyone should be clear of the plan, their role; have an idea, have a thought, but share, be aligned, build up on this structure. This is the reason why I keep avoiding the phrase ‘sustainability strategy’. Instead, I say “I build the strategy for the sustainability integration”. Sustainability is a mindset, and from my perspective, you don’t strategise the mind; work with it, influence it, inspire it”. “Many years ago, when I realised what sustainability was about, I remember I had a T-Shirt-slogan, ‘I love Sustainability’, approach; back then I thought sustainability was self-explicit, no further details needed. Obviously, that was a mistake. That was

“ In the sustainability journey, we need to work together. Everyone may have an idea or a thought, but quick, opportunistic raids won’t help anyone. Sustainability requires structure and focus” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD supplychaindigital.com

SELLAFIELD

“ Those who will seriously and strategically integrate sustainability in their businesses, in their projects, they will experience positive financial performance and long-lasting savings” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

when I realised that I had to personalise my message to every individual or team I spoke to about the subject. So, it was and still is my responsibility to find ways to approach and to bring people along. “I am not saying it is easy. It requires a lot of time and effort to engage with every single person, but there are ways,” says Etoimou. “Obviously sustainability is not down to one person, therefore some specific actions can achieve some quick wins. Impact requires more advocates, and you can attract people with a different voice or way of communicating to work with others that you may not be able to. “This could be somebody’s friend or close colleague with a completely different way of approaching that one person or group of people. However, we need to accept that

some, no matter what, simply don’t want to engage. So, let’s focus and work with the ones that are more receptive.” You could say that Etoimou refers to a pyramid effect here, whereby working with the right mindset towards sustainability creates a pool of individuals that can carry the message to others – creating a ripple effect throughout the organisation. In doing so, not only does this reduce time to impact others but also the extent of which Etoimou must address individual cases of nonadvocacy or even ‘over-advocacy’. “I am a big believer of the impact the environment has on you as an individual, and we are affected by other people’s behaviours – so we can be influenced,” Etoimou says. “Even if one person is not, I doubt that person would remain 100% against sustainability. This is where we discuss equal rights, we talk about our children, our parents, and the environment, there is nothing that this person won’t relate to. It is not black and white, and we start with those that understand it and can support what we are doing.” There is one major factor among the first steps to bringing teams on board. Making sustainability’s impact more measurable and having an equal share in the business plan or corporate KPIs. “Thinking of a CFO as an example, we need to acknowledge that they are right in some respects. The language is different: they discuss Return on Investment (ROI), Earnings Before Interest, Taxes, Depreciation, Amortisation (EBITDA), and we discuss waste management, carbon reduction, and social value. The ambiguity on metrics and the numerous and inconsistent approaches to measuring sustainability impact does not help either. “There is also a ‘short-termism’ effect, which means trying to prove supplychaindigital.com

“ From the awareness level and throughout the supplier journey, sustainability will be there. We are taking an end-toend approach with our supply chain” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

that a sustainability activity will have an immediate result, and this is where any evidence remains incomplete, and we lack this evidence of sustainability’s value.” Embedding Sellafield’s principles into the supply chain There’s a common theme here, which is all about taking action on things that are achievable. In an ideal world, Sellafield Ltd would align its entire workforce to sustainability as a way of living and operating as opposed to a strategy. This was stressed by Etoimou as a staple part of society and how it functions as more than just a means of achieving the climate netzero emissions goal. When looking at the supply chain the approach is very much similar, whereby feasible actions can be taken to ensure that new companies tendering for contracts with 62

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SELLAFIELD

Sellafield align with its sustainability goals. The controllable aspect of this is the criteria, which is how the organisation ensures that suppliers meet the necessary requirements to do business going forward. “We are taking an end-to-end approach with our supply chain. From the awareness level and throughout the supplier journey, sustainability will be there. Considering the nature of our business, which predominantly relies on our supply chain for our purpose of delivery, it only makes sense to work collaboratively with our partners to support, directly and indirectly our sustainability goals,” says Etoimou. “We want to ensure that we will achieve our goals, but most importantly, that we will contribute so more of our existing and potential partners can appreciate the importance of embedding sustainability principles in their organisations. It is fundamental to have more role models around us; only in this way we can achieve a greater, positive impact. “Evidently, there is a direct correlation between meaningful business relationships and exponential impact from sustainability actions. In our case, our social value programme, our Six strategy, combined with our environmental strategy, and the carbon management programme, can only multiply and maximise their impact through collaboration with our supply chain. This provides both parties with the right visibility and understanding of each other’s priorities and maturity level, allowing sharing of knowledge and expertise to advance progress.” Etoimou then explains the need to align its principles and actions with those of its partners. “First of all, it is important and only fair for everyone that would like to work supplychaindigital.com

SELLAFIELD

with us to be aware of our expectations and principles in advance. Our ‘supplier journey’, an interactive guidance tool that describes every step of a supplier’s life cycle within Sellafield, includes among other useful information guidance, sustainability and collaborative working principles. We created a new market engagement strategy, introducing the ‘principles alignment’ and as part of the tender process, new, meaningful, sustainability questions,” says Etoimou. “We are seeking commitment, not perfection, and we ensure that we cover cases of existing contracts as part of our SRM model”, she explains, “this is as well one of the reasons we decided and recently launched an upskilling programme, initially focused on our SMEs, and we are working with our major partners on a joined socioeconomic programme, ensuring alignment and targeted actions with credible results for our communities. “Having said that, I still believe that despite all of these being in place, and all the interactions with the supply chain and our colleagues, in principle, all of this is necessary, but still reactive. In the procurement world, sustainability should start from the design phase, but even this is the second step for me. The first step where everything starts with sustainability, is the mindset. Only a person, a team, an organisation with a mature sustainability mindset will design or describe a need embedding these principles; then, all the system will need to serve this need as described, without ‘negotiations’ in the process.” This re-emphasises the need for a sustainability mindset at the beginning of any design process (no matter if it is the design of a product, service or business model) having and aligning to ESG goals in mind – from 64

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“ I am a big believer of the impact the environment has on you as an individual” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

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here we begin to paint a picture of how the different stages look with mindset being the vital first step that educates further processes. “The person or teams to decide that we need this product, service, building, for example, must have the sustainability mindset in order to begin writing the specification in that way”, Etoimou says, and she continues: “the list is long, but incredibly rewarding: emissions, energy, materials, lifecycle value, impact on the communities, supply chain transparency, among others. It becomes exciting when we look at the numbers. Those who will seriously and strategically integrate sustainability in

their businesses, in their projects, they will experience positive financial performance and long-lasting savings. “I appreciate that numbers matter, but at the same time, for a successful sustainable transformation, we need to invest in the human capital, as this will support and contribute to our social value, competitive advantage, and reputation. “We are currently working on a number of environmental and socio-economic areas, such as compliance, data, energy & water, carbon management, travel, transport, natural capital, good health & wellbeing, built environment, engineering and climate supplychaindigital.com

SELLAFIELD

“ We are seeking commitment, not perfection” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

adaptation among others. But, in parallel, our priority is investment in sustainability integration. For this reason, we built a new engagement plan to make our people feel that everyone has a role, and everything counts. Within this structured approach, focusing on the same goal, everyone will have the opportunity to initiate, influence, and inspire their social or professional circle.” It is acknowledged as well that sustainability at this stage does not mean the same for every single person. “It is part of our engagement plan to achieve this minimum level of common understanding, the understanding of the ‘so what’, ‘why’ we need to care, and ‘how’ we can care meaningfully,” she explains. Etoimou aims this strategy for integrating sustainability into Sellafield Ltd that will likely trigger deliverables through collaboration. Centring sustainability in the heart of every business decision and culture, organisations can look at sustainability as a characteristic of their business rather than an industry or status or buzzword, meaningful actions can be taken to change the way they approach the subject and begin to consider the bigger picture and the long-lasting results.

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November 2023

LOGISTICS

LOGISTICS HUBS HELPING BRING SUPPLY CHAIN RESILIENCE

In the face of disruption and uncertainty, governments and businesses are embracing the logistics hub model to bring resilience to supply chains WRITTEN BY: SEAN ASHCROFT

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LOGISTICS

ong-standing global trade patterns continue to be rocked by world events that started with pandemic and have continued with geopolitical, environmental and economic turmoil. Organisations have come to realise that, to deliver the goods consumers want and societies need would require a new approach toward supply chains. Part of this approach has been the rise of the logistics hub – large-scale structures within which different logistics providers offer value-added services by sharing assets. Sometimes the hub Such hubs improve the efficiency of transportation systems, because they provide the blend of resilience and speed that is required of modern logistics in such an uncertain world. Such hubs are becoming a strategic response not only at enterprise level – at companies such as Uber Freight – but also at government level. Saudi Arabia, for example, is set to build dozens of logistics centres to transform itself into a global logistics hub. There are three types of logistics hubs:

transfer hubs distribution hubs process distribution hubs

The Saudis are seeking to leverage its geographic location to service the continents of Asia, Europe, and Africa by building 59 logistics centres with a total area exceeding 1 billion square feet. These include 12 each in its capital city, Riyadh and the Makkah region, 17 in the Eastern Province, and 18 dotted about the kingdom. Initial development work is focused on 21 centres, and the aim is to complete them all by 2030. Saudi sources say the finished centres will help local industries efficiently export Saudi products and support e-commerce by connecting regions, cities and provinces. The plan also eases the process of obtaining logistic activity licences. To date the Saudi Arabian authorities have granted 1,500 of these to local, regional and international logistics companies. One of those licence holders is Kuehne+Nagel, the Swiss freight forwarder. Saudi leaders say their investment has already seen the country rise 17 places (to 38th) in the World Bank's Logistics Performance Index (LPI). Its ultimate goal is to hit the top 10 by 2030. Also in the Arabian Peninsula, multinational logistics company DB Schenker is making substantial progress on building a renewable energy-powered mega logistics’ hub in Dubai, in the UAE. Its warehouse and logistics hub facilities are supplychaindigital.com

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located in the 18 km/sq Logistics’ District in Dubai South. Ako Djaf, VP Contract Logistics SCM & Distribution, ME&A, for DB Schenker, says: “Many multinational companies are locating more and more in the region. They see it as a platform for distribution from a geographical point of view. It is very attractively positioned, connecting Africa with Europe and the Asia Pacific region. “This is why I see the region growing very strongly in the coming years, even in the face of all the disruption we are seeing at the moment.”

Cainiao – the logistics arm of Alibaba Group – is also growing its hubs strategy, recently announcing a new warehouse in Jakarta, Indonesia, as part of its regional expansion plan. The new Cainiao Cikarang Logistics Park is part of a regional warehouse network of Cainiao Hubs in Southeast Asia, and is the third warehouse in the network. The vision is for Cainiao Cikarang Logistics Park to support manufacturers in their logistics and trading needs, including fulfilment, last mile, import and export for B2B and B2C businesses, smart supply chain supplychaindigital.com

Pan-Euro hub will run Vodafone supply chain across region Hubs form a key part of Vodafone’s global planning and logistics strategy, with the company announcing it is to establish a Pan-European Hub to run all supply chain activity for Europe out of Luxembourg. Reinhard Plaza Bartsch, Vodafone’s Global Head of SCM Development, Operations & Digital, says: “A step in our transformation is the creation of regional logistics hubs. These will help us to optimise our logistics network and build further resilience in our supply chain. “We want to optimise our logistics network and need to make sure we have warehouses in the most optimal location and with the required size.” He adds: The nature of our business will require us to keep some stock close to the markets, therefore it is key for us to leverage technology to orchestrate the logistics network.”

“ Our hubs boost local and regional trade activities by streamlining workflows and processes across the value chain” ERIC XU,

DIRECTOR, CAINIAO GROUP

management, and logistics technology including IoT, automation and warehouse management systems. “This new warehouse is our first infrastructural investment in Indonesia and the third in the region,” said Eric Xu, Vice President, Cainiao Group. “Our strong network and expertise in logistics and supply chain capabilities will help our partners and customers in Indonesia accomplish more in less time and boost local and regional trade activities by streamlining workflows and processes across the value chain.”

LOGISTICS

On the other side of the globe, in the USA, logistics hubs are meshing with automated vehicle technology, with Uber Freight in the vanguard. Uber Freight is currently building an automated trucks hub-to-hub logistics model that will allow autonomous trucks to operate alongside those driven by people. Under this model, a driver picks up a preloaded trailer from the shipper’s facility and delivers it to a transfer hub located close to the highway. The trailer then gets hooked to an automated truck, which drives on the highway to another transfer hub located near the receiver’s facility.

Eric Xu TITLE: DIRECTOR COMPANY: CAINIAO GROUP INDUSTRY: LOGISTICS Xu is GM of Cainiao’s Southeast Asia smart warehouse network, which he says is “helping shape the logistics industry in Southeast Asia, and we believe this can further bolster cross-border trade and e-commerce growth for this region.”

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Mazen Danaf TITLE: SENIOR APPLIED SCIENTIST & ECONOMIST COMPANY: UBER FREIGHT INDUSTRY: LOGISTICS Danaf focuses on analysing the truck transportation landscape, and produces long-term forecasts based on supply and demand indicators. He is also a research affiliate with the Intelligent Transportation Systems Lab at MIT.

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At the second transfer hub, another driver picks up the trailer and delivers it to its final destination. “This model achieves synergies that benefit carriers, drivers, and AV developers,” says Mazen Danaf, Senior Applied Scientist & Economist at Uber Freight. Danaf outlined this hub strategy in a paper published by Uber Freight, called ‘The future of self-driving technology in trucking, in which he sets out the case as to why trucking is the fastest route to commercialising and scaling self-driving technology. Danaf adds: “The hub-to-hub model will achieve synergies that benefit carriers, drivers and autonomous vehicle developers. “Autonomous trucking will not be a dispensable service that simply aims at reducing the cost of trucking but will become an essential component of supply chains, and help satisfy growing demand, while offering drivers better working conditions”.

“The hub-to-hub model benefits carriers, drivers, and AV developers” MAZEN DANAF,

SENIOR APPLIED SCIENTIST & ECONOMIST, UBER FREIGHT

SUSTAINABILITY

Jaintia Hills, India: A worker carries a load of coal weighing 60kg’s, supported by a head-strap, as he ascends the staircase of a coal mine CREDIT: DANIEL BEREHULAK/GETTY IMAGES

November 2023

BUSINESS BATTLES TO COMPLY WITH

NEW SUPPLY CHAIN LAWS & REGULATIONS EcoVadis and LRQA are among those helping businesses stay on the right side of the law when it comes to ESG compliance worldwide WRITTEN BY: SEAN ASHCROFT

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SUSTAINABILITY

here can be little doubt that the ever evolving supply chain regulatory landscape makes it challenging for organisations to keep pace with changing laws around ESG requirements. The companies most at risk are those that lack the technical resources and human capital to comply with changing regulations. Julia Salant is General Solution Manager, Carbon, with EcoVadis, a global provider of sustainability ratings and assessments for companies, based on their environmental, social, and ethical performance. The company provides a platform for businesses to measure, monitor, and improve their sustainability practices, with the goal of promoting sustainable supply chains and reducing environmental and social risks. One thorny problem says Salant is that many companies have neither the technical resources nor human capital needed to comply with new and evolving regulations. “It is challenging for companies to ensure their suppliers are complying with every new regulation,” says Salant, who adds: “Many struggle to assess even top-tier suppliers.” She says the only solution for companies who want to be confident in their supply chain due diligence is to invest in supply chain ESG monitoring tools. For the fact is, due diligence involves multiple aspects of equal importance.

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Gaziantep, Turkey: Syrian refguees trying to survive in Turkey work for minimum wages CREDIT: CHRIS MCGRATH/GETTY IMAGES

“There is still no better data than that sourced from your operations or suppliers on the ground” DR KEVIN FRANKLIN,

ADVISORY MD, LRQA

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SUSTAINABILITY

New Delhi, India: Child labour is most commonly seen in the extraction of raw materials, which often is undertaken in remote areas in under-developed countries

CREDIT: DANIEL BEREHULAK/GETTY IMAGES

Firms need strong governance frameworks “We advise clients to focus most of their energy on strong governance frameworks and high-quality data,” says Dr Kevin Franklin, Advisory MD for LRQA, is a leading global assurance partner. Franklin says many companies see holes in their due diligence efforts because “there is a lack of structure, expertise, accountability, design, tools and weak metrics or monitoring”. He says successfully managing ESG risks means having a framework “that aligns with your risk appetite, vision and level of commitment, and this is especially the case where it relates to human rights risks and violations”. He adds that ESG leaders need to be involved in day-to-day business decision-making.

Dr Kevin Franklin TITLE: ADVISORY MD COMPANY: LRQA INDUSTRY: RISK ASSURANCE Franklin has a proven track record as a thought leader in the field of sustainability, corporate responsibility and responsible-and-sustainable sourcing. He has pioneered the development and implementation of risk mitigation and resilience strategies for numerous multinational corporate clients. supplychaindigital.com

Kabul, Afghanistan: An Afghan child shovels sand at the Sadat Ltd. Brick factory

CREDIT: MAJID SAEEDI/GETTY IMAGES

Julia Salant TITLE: GENERAL SOLUTION MANAGER, CARBON COMPANY: ECOVADIS INDUSTRY: SG RATINGS PROVIDER Salant helps businesses create value through climate action. She leads the strategy, development and implementation of carbon solutions that help EcoVadis’ network engage trading partners in climate action through GHG emissions disclosure and performance improvement.

Regarding data, Franklin stresses it’s not just about quantity – such as data on lower tier suppliers – but also quality. “There is still no better data than that sourced directly from your own operations or suppliers on-the-ground and independently verified, which is especially the case in higher risk markets,” he says. “Transparent and trustworthy due diligence is nearly impossible without quality data and analytics.” In today’s world, technology providers are playing an increasingly important role in helping organisations be due diligencecompliant.

SUSTAINABILITY

“ Companies struggle to ensure even top-tier suppliers are complying with every new regulation” JULIA SALANT,

GENERAL SOLUTION MANAGER, CARBON, ECOVADIS

Technology providers are equipping companies with the platforms, tools and analytics needed to: • Design, monitor and enhance the due diligence process • Map their entire supply chain • Obtain real-time alerts from grievances and media insights “To do due diligence properly, one needs a technology and analytics platform that enables real-time monitoring, benchmarking and the mitigation of ESG risks,” says Franklin.

He adds that although many companies do collect data from their suppliers and operations they are storing this information in PDFs, Word documents and Excel files. Supply chain intelligence platforms, like that of LRQA, deliver actionable insight to enable end-to-end supply chain ESG due diligence. “It helps you understand your own supply chain as well as identify, prioritise and manage risk to drive business performance and meet regulatory requirements,” Franklin explains. He adds: “But even in the world of generative AI many of the risks and insights supplychaindigital.com

SUSTAINABILITY

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from these platforms still need to be identified and verified on-the-ground, and as yet there is no fully viable alternative to realworld in-person remediation.”

It was a significant milestone for human rights and, saysFranklin has had many positive impacts, including translating the “previously intangible risk of human rights” into dollars and cents, with direct impacts on the bottom line. Supply chain laws impact on planning He says: “At LRQA we’ve seen millions of On-the-ground, the reality for those working in supply chain is that new laws are changing dollars’ worth of goods withheld after failing the way that supply chains must be planned to comply with UFPLA requirements. We’ve also seen media coverage and vetted if they are not linked to failing to comply to fall foul of the law. Many with the UFLPA, which of the new regulations have come into effect only in the then creates a real-world past year or so. reputational risk for brands. ACCORDING TO THE “Collectively there are The Uyghur Forced Labor INTERNATIONAL LABOUR Prevention Act (UFLPA) was examples where this has ORGANIZATION impacted profitability and one of the first forced-labour bans to impose a tangible has lead to share prices falling and operational disruptions.” consequence for forced PEOPLE WORK IN SUPPLY CHAIN RELATED JOBS UFLPA, he feels, has labour violations.

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“ ESG compliance is about walking the walk and not making empty platitudes” DR KEVIN FRANKLIN, ADVISORY MD, LRQA

Jaintia Hills, India: A miner unloads tools after being hoisted 300ft from the depths of a coal mine

CREDIT: DANIEL BEREHULAK/GETTY IMAGES

UNITED STATES Uyghur Forced Labor Prevention Act (UFLPA) Applies to: All companies that import into the USA. What it says: Companies must provide clear and comprehensive evidence that all products and parts produced in Xinjiang, China, were made without any form of forced labour. Penalty: Products cannot be imported. MEXICO Forced Labour Ban Applies to: All companies that import into Mexico What it says: Companies need to have documentation and proof that imports into Mexico are not tied to any form of forced labour. Penalty: Contraventions allow the government to detain and block affected imports and to post their findings online.

Five supply chain laws setting the ESG landscape 88

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UNITED KINGDOM Modern Slavery Act Applies to: Companies with turnover of over £36 million and some or all of their business operations in the UK. What it says: The legislation requires companies to issue a modern slavery statement annually, reporting the steps taken to mitigate the risks of modern slavery in their supply chain. Penalty: Court hearings for injunctions if they fail to comply with the requirements.

SUSTAINABILITY

GERMANY Supply Chain Due Diligence Act Applies to: Companies with more than 3,000 employees based in Germany or German-registered branches of international companies. From 2024, it will also apply to companies with more than 1,000 employees based in Germany or German-registered branches of foreign companies. What it says: Requires companies to identify, prevent or minimise the risks of human rights violations and environmental damage in their supply chains. Penalty: Fines of at least €175,000, or up to 2% of the annual turnover, with a periodic penalty of up to €50,000. FRANCE Duty of Vigilance Law Applies to: Companies WITH at least 5,000 employees in France or 10,000 worldwide, either directly or in their subsidiaries. What it says: Companies must have a due diligence plan in place that safeguards human rights and environmental impact from its supply chain operations. Penalty: Service of formal notice that may result in the issuance of a commercial court order and the imposition of a daily fine.

also expanded the scope of company programmes, by placing greater emphasis upstream on raw materials. “He adds: “It’s also brought a number of new stakeholders into the conversation, such as law firms. This has been both positive, but is also challenging, as these new stakeholders figure out scalable roles and responsibilities in a growing ecosystem.” Then in Europe, there is the German Supply Chain Act (GSCA) and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). These, say Franklin, will sharpen a company’s focus on their human rights and environmental due diligence, because they require a formal enterprise risk management process that forces companies to manage and report risks, and what they are doing about those risks. “This is all about walking the walk and not making empty platitudes,” says Franklin. “They must instead demonstrate tangible action, independently verify statements and reports, and work towards a new level of trust and transparency with stakeholders.” He adds that the EU’s new directive is also one of the few to cover both human rights and environmental impact from value chains. “It takes a step further than previous reporting requirements by mandating companies demonstrate their risk mitigation strategies,” he says. “We’re in a new era of risk, with a completely new standard of due diligence expected by investors and stakeholders, so it’s time to meet the challenge.” supplychaindigital.com

TECH & AI

DIGITAL REVOLUTION IS RESHAPING THE FUTURE OF PROCUREMENT Procurement technology has moved on from automating repetitive tasks, to solutions that ‘mesh’ with humans to great strategic effect WRITTEN BY: SEAN ASHCROFT

eing so process-led, one area of the supply chain that lends itself to digitalisation more than most is procurement. The pandemic has made this even more so. The need to mitigate against disruption and the drive towards sustainability have made procurement more strategic in nature. 90

November 2023

This has led organisations to automate process-heavy work such as contracts renewals and invoice processing, to allow procurement people to focus on strategic tasks around supplier relations and ESG compliance – important work that itself requires technology for it to be executed effectively.

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TECH & AI

PwC’s 2022 Digital Procurement Survey shows that nearly all chief procurement officers (CPOs) understand the power of digitisation, seeing digital transformation as second only to supplier collaboration as the most important procurement strategy. The survey shows that 77% of companies are already equipped with source-topay digital solutions, suggesting that the digitalisation of processes is no longer a nice-to-have, but an operational necessity. Leaders such as Jim Kilpatrick, Global Supply Chain & Network Operations Leader for Deloitte, certainly believe this to be true. “It’s going to be increasingly difficult for organisations to remain competitive and agile if they continue to work in a nondigital model,” says Kilpatrick. “AI can

Jim Kilpatrick TITLE: GLOBAL SUPPLY CHAIN & NETWORK OPERATIONS LEADER COMPANY: DELOITTE INDUSTRY: PROFESSIONAL SERVICES Kilpatrick is a Partner with Deloitte, and based in Toronto, Canada. In his 30-plus year consulting career with Deloitte, he has worked with many leading Canadian and Global organisations, significantly improving their business performance and competitiveness.

TECH & AI

Boston Consulting Group: Digital Procurement WATCH NOW

sort through those paper invoices. It can identify problems and automatically resolve them with no humans involved.” Kilpatrick was speaking to Harvard Business Review, as part of its paper called Digital Optimization Paves the Way to Strategic Supplier Management, which explores the supplier management challenges facing organisations, and the benefits of adopting the right technologies. It was sponsored by Amazon Business, which offers solutions that not only manage bulk purchasing and approval workflows, but also generate data that provides actionable insights. The rise of Amazon Business in this area is a sure marker that procurement is becoming more heavily invested than ever in digital processes. The need for procurement to be more strategic has forced the hand of many organisations on digital transformation. Matthew Rose, Procurement Transformation Practice Lead and Partner 94

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at KPMG UK, says that in the early days of this trend, technology enabled organisations “to run leaner headcounts and focus the available talent on higher-value tasks”. He cites as an example the use of machine learning (ML) to automate the purchase-topay process. “The first wave of machines focused on repeatable high-volume tasks and lent heavily on robotic process automation and simple bots,” says Rose. But he says that now, automation and AI is increasingly being used for higher value-added tasks. “This is illustrated by

the explosion of available solutions on the market," he points out. “Collaboration, supply market research, sourcing and data analytics have all been targeted by new wave intelligence-enabling procurement technology.” Rose stresses that, rather than replacing humans in these roles, technology increasingly is “seeking to augment human capability” by enabling procurement resources “to do more with less, or to uncover insights that would not readily be available to humans”. According to Rose, the digital workforce is now a blend of human

“ Rather than replacing humans in roles technology seeks to augment human capability” MATTHEW ROSE,

PROCUREMENT TRANSFORMATION PRACTICE LEAD & PARTNER, KPMG

Matthew Rose TITLE: PROCUREMENT TRANSFORMATION PRACTICE LEAD & PARTNER COMPANY: KPMG UK INDUSTRY: PROFESSIONAL SERVICES Rose leads KPMG's Procurement Advisory Team in the UK. He has 20 years’ experience in transforming procurement, “building world-class capability and unlocking hundreds of millions of pounds in value for my clients”

November 2023

and machine resources meshed together in “a mutually dependent process”. He adds that, as with finding the right procurement staff, the challenge is “often uncovering the right technology to join the digital workforce”. Because of this challenge, KPMG surveyed hundreds of technology providers, the aim being to identify the top tech for automating and augmenting procurement functions. KPMG used its insights to help clients plan ahead so that they deploy the right platform for a successful digital workforce. “For example,” says Rose, “one of our global retail clients had a high volume of low-value purchases. Those purchases in the tail spend offered little payback on time invested by procurement team members. “The retailer chose to deploy automated intelligent negotiation technology to rapidly engage with vendors, negotiate terms and place orders. “The technology enabled the retailer to address third party spend that wasn’t being touched by procurement and unlock millions in untapped savings.”

TECH & AI

The global procurement software market size was valued at

US$6.67bn in 2022

‘Mindset failure’ biggest digital transformation problem Rose cites another example – that of a client in the oil and gas sector, whose procurement team KPMG helped deploy advanced AI-based decision-making tools. “The solution helped it prioritise procurement projects and allocate resources effectively,” Rose says. “It also helped it determine where existing supply solutions might exist, and to prioritise this in the work stack, thus delivering high singledigit improvements in efficiency.” The good news, says Rose, is that technology has the capability to deliver a welter of such opportunities for procurement, “be this driving more innovation from the supply base, orchestrating ESG in the supply chain or reducing risk back to source”. He adds: “Whatever form that value takes, procurement will need to harness digitalisation and be a catalyst for change. It will also need to continuously learn, innovate and transform.” THis, he says, has “fundamental implications” for the skills required in the future digital procurement workforce.

Most digital implementations have a success rate of about 30-40%, points out noted procurement advisor David Loseby, who also has a doctorate in behavioural science. Loseby says the failure rate is so eyewateringly high because of a “mindset failure” on the part of organisations. He says: “Digital transformations are not technology-change projects, but people-change projects. If you don't involve the people that are going to be impacted, and suddenly impose it upon them, guess what? You get lots of rejection.” For Loseby, re-skilling employees and clearly demarcating their changing roles is an inviolable step in any technology change project. He warns: “You’re pulling them into the fear of the unknown. You’ve got to balance the equation by making sure there’s something in the change process for them. Don’t leave me fearing I might be shunted somewhere else at the end of it all.”

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