5 Ways to Make Your Supply Chain More Sustainable

As the world becomes more digitized, companies are under increasing pressure to improve the sustainability of their supply chains. Here are 5 ways to make your supply chain more sustainable, from using artificial intelligence to increasing visibility.

  1. Use AI to stay ahead of emissions regulations.
    As climate change continues to be a pressing global issue, emissions regulations are only going to become more strict. Use artificial intelligence to stay up-to-date on the latest emissions regulations and ensure that your company is compliant. AI can also help you identify ways to reduce your emissions and improve your overall sustainability.
  2. Increase visibility into your supply chain.
    Visibility is key to managing a sustainable supply chain. You need to know where your materials are coming from, how they’re being produced, and where they’re going after they leave your facility. By tracking this information, you can make changes to reduce your carbon footprint and improve overall sustainability.
  3. Make sustainability a priority for suppliers.
    Sustainability should be a key criteria when choosing suppliers. Working with supplier who share your commitment to sustainability will help you further reduce your carbon footprint and have a positive impact on the environment.
  4. Invest in renewable energy sources.
    Investing in renewable energy sources is a great way to reduce the carbon footprint of your supply chain. Solar and wind power are becoming increasingly cost-effective, so now is the time to make the switch! Not only will this help the environment, but it will also save you money in the long run.
  5. Educate employees on sustainability practices.
    Your employees play a big role in making your supply chain more sustainable. Educate them on best practices and encourage them to come up with new ideas on how to improve sustainability throughout the entire organization. Creating a culture of sustainability will help facilitate lasting change that benefits both the environment and the bottom line!


There’s no question that sustainability is important for businesses today. But with so many different aspects of supply chain management to consider, it can be difficult to know where to start! By following these 5 tips, you can make your supply chain more sustainable and better prepared for the future!

If you’d like to know more about supply chains and sustainability, don’t forget to check out my Digital Supply Chain podcast – the number one podcast focussing on the digitisation of supply chains

Photo credit Rab Lawrence

How the Internet of Things Can Make Your Manufacturing Business More Sustainable

The Internet of Things, often abbreviated as IoT, refers to the network of physical devices, vehicles, home appliances, and other items that are embedded with electronics, software, sensors, actuators, and connectivity which enable these objects to connect and exchange data.

The Industrial Internet of Things, or IIoT, is a specific application of the Internet of Things that pertains to the manufacturing sector. In recent years, sustainability has become an important issue for manufacturers as consumers increasingly seek out products that have been made sustainably and with minimal impact on the environment.

Fortunately, the IIoT can help manufacturers reduce their environmental impact and become more sustainable. Here’s how:

  1. Collecting Data to Increase Visibility and Transparency Across the Value Chain
    The first step to becoming more sustainable is to have visibility and transparency across the entire value chain. This means understanding where your raw materials come from, how they are sourced, how they are used in your manufacturing process, what happens to your finished products after they are sold, etc. In order to gain this visibility and transparency, manufacturers must collect data at every stage of the value chain. This data can be collected manually or automatically through sensors and other digital technologies. Once this data is collected, it can be analyzed to identify areas where your company can become more efficient and reduce waste.
  1. Connecting Machines to Improve Efficiency
    One way that manufacturers can use the IIoT to become more sustainable is by connecting their machines together in order to improve efficiency. For example, if one machine is idling while another machine is overloaded, this presents an opportunity to optimize production by redistributing work among the machines. By connecting machines together and using data analytics to optimize production in this way, manufacturers can avoid wasting energy and resources.
  2. Using Renewable Energy Sources
    Another way that manufacturers can use the IIoT to become more sustainable is by using renewable energy sources such as solar or wind power instead of traditional sources such as coal or natural gas. While renewable energy sources may have been more expensive in the past, advances in technology have led to a decrease in cost while simultaneously increasing efficiency. As a result, many manufacturers are making the switch to renewable energy sources in order to reduce their environmental impact.
  3. Implementing Predictive Maintenance Schedules
    Predictive maintenance is a type of maintenance that is performed before problems occur. This is in contrast to traditional preventive maintenance which is performed on a regular schedule whether or not problems exist. By using predictive maintenance schedules based on data collected by sensors, manufacturers can avoid unexpected downtime due to equipment failures. In addition, predictive maintenance can help extend the lifespan of equipment which leads to fewer replacement cycles and less waste over time.

The IIoT offers many opportunities for manufacturers to become more sustainable businesses. By collecting data across the value chain, connecting machines together for improved efficiency, using renewable energy sources wherever possible, and implementing predictive maintenance schedules; manufacturers can reduce their environmental impact while simultaneously improving their bottom line. As consumers increasingly seek out sustainable products, there has never been a better time for manufacturers to take advantage of these opportunities presented by the IIoT .

How IoT Helps Fight Climate Change


The internet of things, or “IoT,” is a system of connected devices that share data and work together to achieve a common goal. By 2025, it’s estimated that there will be 75 billion IoT devices in use worldwide. That represents a major opportunity to reduce carbon emissions and make our economy more sustainable. Here’s how IoT is already reducing carbon emissions, and how it can do even more in the future.

Monitoring and reducing energy usage: One of the most direct ways IoT is reducing carbon emissions is by monitoring and reducing energy usage. Connected devices can track everything from how much electricity a building is using to how much water a factory is consuming. This data can be used to make real-time adjustments that result in significant reductions in energy usage. In some cases, these reductions can be as much as 30%.

Improving transportation: Another way IoT is reducing carbon emissions is by improving transportation. Connected devices can be used to optimize shipping routes and traffic patterns. This results in fewer vehicles on the road and less congestion. Additionally, IoT can be used to develop new alternative fuel sources like electric vehicles.

Increasing green energy use: In addition to reducing energy consumption, IoT can also be used to increase the use of renewable energy sources. For example, wind turbines and solar panels can be outfitted with sensors that allow them to adjust their output based on real-time conditions. This ensures that they’re always operating at maximum efficiency, which reduces the need for traditional (and emitting) forms of energy generation.

IoT presents a major opportunity to reduce carbon emissions and make our economy more sustainable. By monitoring energy usage, improving transportation, and increasing green energy use, IoT is already having a positive impact on the environment. As the number of connected devices continues to grow, so too will the potential for even greater reductions in carbon emissions.

If you’d like to know more about successful climate emissions reduction strategies, don’t forget to check out my weekly Climate 21 podcast. With roughly 100 episodes published, you’ll be sure to find lots of learnings there.

How much cheaper is it to drive an electric vehicle than an internal combustion engine one?

“How much does it cost to drive an Electric Vehicle?” and “How much cheaper is it to drive an Electric Vehicle than a petrol/diesel car?”

Those are two questions I get asked a lot and it’s not as easy to answer as you might think. Why? Well, it depends on two main factors

  1. the price of the fuel (electricity/petrol/diesel) in your area and
  2. the fuel efficiency of the vehicle we’re talking about

2008 Toyota Prius2018 Nissan Leaf 40kWh
Price of Fuel (per kWh or litre)€1.30€0.09
Fuel efficiency5.5l/100km6km/kWh
Cost per km€0.0715€0.015
Cost for 10,000km a year€715€150

From 2008 to 2018 I drove a Toyota Prius and it used to get around 5.5l/100km (42.8mpg), and petrol here in Spain costs around €1.30 per litre (roughly $5.93 per gallon). I drove an average 10,000km (6,000 miles) a year so that cost me about €715 in petrol expenses alone (ignoring oil changes, maintenance, etc.).

In 2018 I traded in the Prius for a Nissan Leaf 40kWh. The Leaf can drive 6.25km per kWh of energy in the battery. If we round that down to 6km to make the calculations easier (and to be a little conservative), then because our night rate electricity costs €0.09/kWh, that gives us a cost per km of €0.015 and a total of €150 for the full year’s 10,000km.

Of course, I plug the Leaf in to charge often during the day when the sun is shining so as to take advantage of the “free” electricity being generated by our solar panels, so the figure of €150 is much higher than I pay in reality.

And then there is the issue of maintenance. I didn’t keep a record of how much maintenance I paid for the annual maintenance for the Prius, but when I took delivery of the Leaf the first maintenance scheduled in the Maintenance Manual was at 30,000km. Electric vehicles require far less maintenance than internal combustion engines.

These were my costs. Substitute in your own local costs to see how much you would save by switching your car to an electric one (if you haven’t already!).

The iPhonification of the Automotive Industry

The world of automotive is changing, changing utterly. And many of the big name brands we are familiar with today will go the way of Nokia, Kodak, and Blockbusters, if they don’t change completely as well.

In 2011 Marc Andreessen penned his now famous essay Why Software Is Eating The World in which he pointed out how software is taking over everything from book sales (Amazon), to direct marketing (Google), to everything from financial services, oil and gas, health and education, on and on, you get the idea.

Automotive is no exception to this phenomenon (as Andreesen himself pointed out in his piece), but the extent of that change has gone beyond what he even imagined.

Software

Most of us are familiar with how Tesla provides over-the-air updates for its vehicles, in much the same way as Apple does for iPhones. The updates can be bug fixes (Tesla offers a bug bounty for anyone who finds a bug in its code), they can be feature adds, or they can be efficiency gains. However, what you may be less aware of is how Tesla has also recently started to offer paid over-the-air updates to do things like shave half a second off the 0-100km (0-60mph) time of its vehicles, to activate rear seat heating in cars that shipped without that feature turned on, and they are about to offer their Full Self Driving on a subscription basis.

This is huge. I’m not aware of any other automotive manufacturer who is doing this, or even has the capability to do this. Tesla, similar to Apple, has realised that their hardware device can be a platform for software sales. Whether Tesla further follow Apple and opens an App Store for 3rd party developers to develop apps for their cars remains to be seen, but there is nothing technologically stopping them from doing so. On the other hand, the incumbent car companies have all sorts of technological, logistical, and regulatory hoops they will have to jump through before they can follow Tesla and embrace this new business model turning their cars into software sales platforms. 

To their credit Volkswagen have seen this change, and appear to be leaning into it. In a post on LinkedIn last year, Herbert Diess, Chairman of the Board of Management of the Volkswagen Group said

The car will become the most complex internet device we have known so far, the car will become a software product 

This is the most blatant acknowledgement of this trend I have seen by any traditional auto maker, but on the other hand, Volkswagen do have some *ahem* repetitional issues to live down, so if anyone needs to embrace change, it is them.

Waymo

 

And of course the tech companies are jumping in – Apple has its secretive Project Titan, which we know very little about still. Then there is Google who have multiple plays in this space. The three most prominent are Android Auto, Android Automotive, and Waymo. What is the difference between them? Android Auto runs on Android phones and can display on a car’s infotainment system when connected to the vehicle via USB. Android Automotive is a customisable operating system and platform for running a car’s infotainment systems, while Waymo is an operating system for the complete operation of autonomous vehicles. Waymo (the company’s) ambition in this space is breathtaking. In April 2019 Waymo CEO John Krafcik said that 

Anything that has wheels and moves along the surface of the earth is something that we, in the future, could imagine being driven by Waymo

So, not just passenger vehicles then? Nope. *Anything* that has wheels.

Think back to 2008. That is when Google released Android, and see what that did to the mobile phone ecosystem (Blackberry, anyone? Nokia?). Now imagine a similar, or even greater disruption happening in the transportation sector over the next 10-20 years and you’ll start to get some idea of what Google/Waymo are thinking.

Transportation as a Service

Similar to Apple’s iPhone Upgrade Program where you pay a set amount every month, and you get to swap your 12 month old iPhone for a brand new iPhone every year, car makers are now starting to embrace the car subscription model (ofter referred to as either Mobility as a Service or Transportation as a Service). Several car companies now offer the ability to do a long term rental of their vehicles (typically anything from 4 months to 4 years) which includes an agreed upper limit of mileage, full insurance, maintenance, tax and registration fees, and management of tolls and fines.

Why are they doing this? 

There are a number of reasons. 

  1. Data – modern cars now ship with hundreds of built-in sensors, and a SIM card for connectivity. This is hugely valuable information, and who does this data belong to? Well, if the manufacturer maintains ownership of the vehicle, then written into the rental contract of the vehicle will be a clause, or clauses making absolutely sure there is no doubt who owns the data. I had two guests on my podcast recently talking about a software solution to capture and store all that data for vehicle manufacturers
  2. Consumers want it – the ownership model is going away. Gen Z, millenials, and even old fogies like me are increasingly eschewing buying big ticket items like cars. Especially as cars increasingly have more and more technology built into them, they become out-of-date quicker, so having an option to drive a new vehicle every 3 years say, can be very attractive (that and having insurance, maintenance, etc. all looked after for you is the icing on top)
  3. Existential threat – the current model of selling cars is dying. A car manufacturer who sold a car 10 years ago could reasonably expect to make $30,000 over the lifetime of the vehicle in maintenance, spare parts, and repairs. Now however, that $30,000 is decreasing because of the shift to electric vehicles which cost at least 50% less to maintain, because of the increasing number of sensors in cars (parking assistance, lane keeping, situational awareness, etc.) which means fewer repairs are needed, and because of the fall in the numbers of people buying cars

Sustainability?

Can it be sustainable to swap your car for a new one every 3-4 years?

Like so many of these things, the answer is “it depends”.

At this point batteries in electric vehicles typically last over 500,000km, and a recent paper from well known battery researcher Jeff Dahn, one of the pioneering developers of the lithium ion battery, showed that Tesla batteries can last up to 10,000 discharge cycles or 3.6 million km (2m miles). Considering car bodies average 322,000km this means a battery of this type could power over 10 vehicles in its working life, before being retired to live out the rest of its considerable life as stationary storage on an electricity grid somewhere! 

Could this be the next new business model for automotive manufacturers? Rent out their vehicles for 3-4 years, take them back, replace some of the body parts, update the electronics, and rent it out again?Cars are already the most recycled consumer product in the world today, so there is precedent for this, and only some of the parts would need to be replaced when the vehicle came back.

Of course, using Industry 4.0 technologies which are increasingly being adopted by automotive companies, these vehicles can be designed from the ground up to be recycled, can be manufactured with take-apart in mind, and can report their status back to their manufacturer throughout their life, to help decide which parts need to be replaced.

In this way, far fewer “new cars” would need to be manufactured, and vehicles would get closer to 95-99% recycled parts, which would be a huge sustainability win.

If you’d like to know more about the use of Industry 4.0 in the automotive industry check out the recent “Industry 4.0 and The Next Generation of Mobility for Riders – NOT Drivers!” episode on VoiceAmerica.com

This post was posted originally on my Forbes blog

Six steps to amazing broadcast-quality 4K video for your working from home Zoom meetings

In my last blog post I talked about how I have used the time at home to improve the audio quality of my Digital Supply Chain podcast. Now in this post I want to talk about how I have gone on to improve the video quality I’m able to put out – this works for video recording, for live-streaming, but as a nice byproduct, also for Zoom/Team calls, webinars, and the like.

Screenshot of Zoom call in 4K

 

So, how did I fare? You be the judge. In the images above (click to enlarge) you can see the before and after images from Zoom calls. In the first image, I am simply using my laptop’s built-in webcam for the call, whereas in the second image I’m using my all new setup which is capable of live-streaming 4K video. Scroll to the end of this post for a video showcasing the results 👇🏻

So, how did I achieve this? To be honest, it was a steep learning curve, but I’ll try to summarise what I learned below.

  1. it is going to sound obvious, but to get high quality 4K video, you are going to need a good camera – one that is capable of putting out 4K video (duh!) and  clean HDMI (I had no idea what “clean HDMI” was before embarking on this journey – fortunately my colleague Timo Elliott had embarked on this journey long before this crisis, so he was able to give me some pointers, including the need for a camera with clean HDMI out). I opted for a Canon EOS R which is a bit of overkill for this job, but I already had a collection of good Canon lenses, so it made sense for me to purchase a camera capable of utilising them. A quick Google search will bring up a long list of articles each with lists of cameras with clean HDMI out.
  2. The next thing is to sort out how to get the HDMI feed from the camera into the laptop. The HDMI port on most computers is for putting out a HDMI signal (to an external monitor or data projector, for example), not for receiving one, so you need a HDMI capture card to convert the HDMI signal to a USB one that you can then feed into the USB port on the computer. Many people recommend the Elgato Camlink capture card, but they have been out of stock everywhere I looked for months now, so I opted for a Digitnow! one instead (I hadn’t come across the brand before, but it had good reviews), and it is doing a superb job!
  3. Now that we have the 4K video coming from the camera into the computer we need to be able to use it for recording video, for Zoom/Teams calls, for Webinars and/or live-streaming. To achieve this you need software like ManyCam or if you are Mac based (like me), you can use ecamm Live. I have used both, and I can strongly recommend Ecamm Live over ManyCam for a variety of reasons. ManyCam is glitchy (currently it has issues working with Zoom), its user interface is challenging to navigate and settings are often forgotten by the app, and support isn’t the best. ecamm Live on the other hand has a very easy to use interface, it is rock solid in terms of reliability, and fortunately, I have not had any reason to check out whether or not it has good support, but I suspect it does(!). The other thing that really sold me on Ecamm Live is that there is a really good set of short tutorials on its use over on YouTube. Checking these out before getting the software allowed me to see its capabilities, and ease of use. ecamm also has a 14 day trial option (without asking for credit card details) so you really can try before you rent (yes rent – Ecamm is a subscription service, not a purchase and I see this as a good thing because the developers are constantly rolling out new features, so it is continuously improving). By the way, to use your 4K video in Zoom or Teams, you will need to install the Virtual Cam option which is only available with the ecamm Live Pro  option.
  4. The next thing you will need is a green screen (aka chroma key). This can be as easy pinning some green cloth to the wall behind you, or you can go for a commercially available one. I chose the latter route and ponied up for an elgato Green Screen. This one is handy because it is free standing, and doesn’t require any supports. elgato also have a green screen that can be hung from the ceiling.
  5. You should also have key lights. These are lights which you place behind your screen facing you to illuminate your face. Ideally you have two, one on either side of your screen for even illumination and they should give off controllable, diffuse light, so the light on your face is not too harsh. I opted for a pair of Elgato Key Light Airs. They have built-in wifi and come with an app for your smart phone, and your computer so you can quickly and easily adjust your light temperature and brightness. For the app to work on your computer though, your computer needs to be connected to wifi. Not a problem, right? Wrong, because…
  6. The final piece of the puzzle is, your computer should use a wired connection for Internet access, not wifi. Wifi is great for most things, no doubt about it, but when you need a rock steady connection for pushing out broadcast quality video, a wired connection is your only real option. Also, obviously a good internet connection is required, but if you’re working from home, you already have that, don’t you?

And the results?

I shot this quick video to let you see the kind of output you can expect:

 

That’s it. It took a few trials and errors, but now I have the ability to output amazing broadcast video, either in a Livestream, or recorded like the one above.

If you have any comments or questions, feel free to leave them in the comments below, and I’ll try my best to answer them.

Seven simple steps to better quality podcasts

I published my first podcast, called PodLeaders back in around 2006 and ran it for two years. I have set up and published a several more podcasts since then, including my most recent one, the Digital Supply Chain podcast which I set up in June of last year.

The recent Coronavirus pandemic has brought a halt to my travels and this allowed me to focus more on the podcast, and in doing so I learned a LOT about how to improve the quality of your podcast. The improvement in quality has coincided with a big upswing in listenership, which is nice. Some of this increase may be to do with the uptick in quality, but it is also likely to be that the content is more topical (several Coronavirus impact on supply chain podcasts), and because the frequency of publication has gone up.

Graph of the stats for the podcast
Graph of the stats for the podcast

So here is my new and (vastly) improved podcast process, in case it helps anyone else with their podcast (or podcast aspirations!).

 

Calendly screenshot
Calendly screenshot

  1. Step 1 in my podcast is to schedule the guest interview. This is quite straightforward if the guest is an SAP colleague as I can see their availability on their calendars, and vice versa, but for folks outside the organisation this can be a lot of back and forward, so I set up a Calendly account. Calendly allows people to see and book the available slots on my calendar, and so saves a lot of the to’ing and fro’ing that is otherwise required to find a mutually agreeable time.
  2. Step 2. Once the recording time is confirmed (or sometimes a prep call, followed by the recording), I set up the call on the podcast recording platform Squadcast. Squadcast, like Zencastr records in lossless WAV format for better quality audio, but unlike Zencastr, Squadcast uploads the recorded file live to the cloud for safe storage, as the podcast is happening, and it also has a video interface, so you can see the person you are talking to. I can’t stress enough how much better this makes conversation flow. The video is not recorded (and guests have an option not to turn on their cameras, if they’re not comfortable, or they’re still in their pyjamas!). Squadcast do say they will add an option to record video later this year, so if this is something you need, they will be adding it.
  3. Once the interview has concluded, I download the WAV files from Squadcast, and I run them quickly through the Noise Reduction and Normalisation sound effects in Audacity (an open source audio editing program). The Noise Reduction in Audacity is particularly easy to use, and can quickly get rid of any annoying static, or hissing sounds that may have been picked up.

    Hindenburg Journalist Pro screenshot
    Hindenburg Journalist Pro screenshot
  4. Having exported the cleaned-up files from Audacity, I drop them into Hindenburg Journalist Pro – this is an application which is specifically created for the editing of podcasts. This is the only software I’m aware of which is specifically created for podcast production. Journalist Pro’s user interface does take a little getting used to, but they have great video tutorials online to help get you up-to-speed quickly, and they have a 30 Day free trial, so you can try before you buy. The auto-levelling, the voice profiles, the granular volume controls, are some some of the many reasons this program is a podcaster’s best friend. For reference, before Journalist Pro, I used to use GarageBand, and that is not bad, but because it is a program designed for music editing, there were quirks and work-arounds you had to do all the time when working on podcasts. On the other hand, GarageBand if free if you own a Mac, so that’s something to take into consideration too.
  5. Once the podcast production is completed in Journalist Pro, you can export it directly to your podcast host site. In my case, my podcast host is called Buzzsprout. I have used other podcast hosting sites like Libsyn, and Podbean, but to my mind Buzzsprout is the best of them. And I say this not specifically for any technical reasons, but rather because they go out of their way to make the podcast publication process painless. Not just do they have a nice simple interface for podcast publication, but they also have a great Youtube channel with loads of fantastic tips and tricks to help you set up, or improve your podcast, a cool podcast of their own (duh!), and a useful newsletter. It was via their newsletter that I learned of Journalist Pro, for example. However, when I’ve finished with the production in Journalist Pro, I don’t publish the audio directly to Buzzsprout, instead I export it as a WAV file to my computer.

    Auphonic screenshot
    Auphonic screenshot
  6. I export the WAV file to my disk because I want to improve it a little more. So now, I upload the file to Auphonic. Auphonic is a magic site which just improves your files audio. From the screenshot above you can see the before waveform at the bottom, and the after waveform at the top – the audio levels have been levelled! Not just that, the audio post Auphonic just sounds better. Now it is ready to be published!

    Buzzsprout upload screen
    Buzzsprout upload screen
  7. So, I upload the file to Buzzsprout, and also most times to Trint as well. What is Trint? Trint is a site that does transcription of audio files using AI. This means you get the transcription back in minutes, rather than the days it can take when you are relying on humans to do the transcription. Trint also has a free trial, so if you’re interested in trying it out, you have nothing to lose – really, it is not one of those free trials where they take your credit card details and make it hard for you to back out. As transcription goes, the output is quite good. It is not perfect, obviously and will need some work to clean it up, but it is fast, and it has an excellent interface for that inevitable clean-up. Then, I post the transcriptions here on this blog, along with the Buzzsprout player so anyone who is interested can listen to the podcast, and read along the text as well, see here for an example.

Ok, that’s it. Those are my seven steps to better podcasts. For now. I’m always learning, so I may do a follow-up as I learn more. If there is anything I missed, some further improvements you think I could make, or some questions you have, do please feel free to hit me up in the comments, or drop me an email.

Digital Supply Chain and surviving coronavirus-driven supply chain disruptions – a chat with MSCG

Supply chains have never been hit with so many disruptions at once. A perfect storm of trade wars, an oil price crash, and then the coronavirus have seen global supply chains shocked like never before.

In the midst of this, via a chat on LinkedIn I discovered that MSCG held a webinar for partners and customers on this very topic, so I invited the two webinar hosts, Dr Dan Bhide and Odell Smith to come on the podcast and talk about the comments, concerns, and learnings folks came away from the webinar with.

I think it was a great chat, but don’t take my word for it (I may be a bit biased 😉 ), have a listen using the player above and/or check out the transcript below, and let me know what you think.

 

Odell Smith [00:00:00] We’ve been in great times, you know, over the last over the last several years, and and the the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place.

 

Tom Raftery [00:00:19] Good morning, good afternoon or good evening. Where ever you are in the world. This is the digital supply chain podcast and I am your host, Tom Raftery.

 

Tom Raftery [00:00:31] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have two guests, Dan and Odell. Dan and Odell, would you like to introduce yourselves?

 

Dr Dan Bhide [00:00:45] Yes, happy to Tom. Thanks for having us on your podcast today. Really look forward to this conversation. My name is Dan Bhide. I’m a co-founder and partner at My Supply Chain Group. We are Enterprise consulting firm, helping our clients with supply chain stategy, process reengineering and solution implementation in multiple industry verticals.

 

Tom Raftery [00:01:07] Super, and Odell…

 

Odell Smith [00:01:09] Hey. Glad to be here. My name is Odell Smith. I have been with My Supply Chain Group for since it started over 11 years ago. I have been working in the supply chain space for over 30 years and specifically and in I.T. for the last 26 or so and build ITs, architect I.T. solutions for the supply chain.

 

Tom Raftery [00:01:38] Nice, nice, nice. Now, you guys held a webinar a week or so ago addressing specifically supply chain disruption, because  we’re in a kind of a crazy mixed up world right now, this is April 2020, the 14th of April 2020. You know, everything in the world seems to have gone to pot. And you had about a hundred or so people on the webinar. And I was interested to maybe bring some of the learnings from that to the audience of his podcast. So, do you want to talk about the background to the webinar first and then we can get into some of the things that come out of it?

 

Dr Dan Bhide [00:02:20] Indeed, we had a lot of other clients calling us, asking, hey, you know, can you help us with these issues vs those issues? And we certainly engage in those activities. What turns out from our experience is this unlike many other disruptions that we have seen in the recent past, whether it was an earthquake or a tsunami, or a fire at a major airport, this one is unique in the sense that quite a few things have certainly assembly together themselves in one place at one time. You know, whether it’s the corona pandemic, whether it’s also the mix of the US-Sino trade war that’s actually been happening for the last couple of years whether it is this certain glut of oil and the rapid decline in oil prices because of that, the fear of recession. All those things are suddenly piled up on us. And a lot of companies that thought they had their business continuity plans put together are now finding that, you know, those weren’t after all that resilient. So that was the reason behind us saying lets take a big picture approach to helping our clients and prospects understand what happened, why it’s happening and what we can do about it. As we go on this conversation we can explain the fact that, you know, beyond going from just issues, impact and mitigation strategies, very able to help clients understand how to actually translate a mitigation strategy into the specific action plans and the specific tasks.

 

Tom Raftery [00:03:44] Okay. Odell, you want to jump in and add anything to that or…

 

Odell Smith [00:03:48] A lot of a lot of this kind of comes down to to information and in the sharing of information. And so one of the one of the only ways that any business is going to be able to get through this is is with collaboration. And so so there’s being able to have information to process and manage internally as well as being able to share with your your vendors and your customers.

 

Tom Raftery [00:04:20] Can I interrupt you Odell for a second just, rather than getting into that just yet, can we take a step back? And we’ve identified the kind of main factors, the drop in oil price, the trade wars and the sudden global pandemic that has shut almost everything down. Those are the big picture factors. But how is that affecting supply chains? How is that affecting organizations you work with? What is it? What are the problems that you guys are seeing out there for companies?

 

Odell Smith [00:04:55] OK. So an example is there’s there’s quite a bit of disruption in in not only in in some of the vendors and suppliers, especially with the the great focus that’s been happening over the last 10 to 20 years of outsourcing, a lot of stuff overseas. And and so there’s obviously enormous impact there with suppliers not being able to provide raw material and/or finished goods to to the supply chains. But in addition to that, there’s there’s logistics impacts as well. So take, for instance, one of our clients has asked us to help them build some what/if simulation capability around port closures. So as these as these products, in addition to the suppliers not being able to provide things, the government mandated closure of of logistics facilities and ports has been a significant problem and a concern with several companies in addition to health and safety measures for the people that work in those areas. So there’s just a couple of examples of of things where things that you wouldn’t normally expect. I mean, sometimes you have union strikes and these type of things, but they’re they’re known more ahead of time. Right. Sure. And there’s a way to be able to try to mitigate some of that. But this is this is urgent, immediate and unexpected in many cases.

 

Tom Raftery [00:06:36] Totally, totally unprecedented to use a word that’s been used an awful lot these days.

 

Odell Smith [00:06:43] Exactly.

 

Dr Dan Bhide [00:06:44] You know, if you think about it Tom, even in the last few big disruption that some of us have read about or been through we were, none of us were around for the 1929 Great Depression, many of us may not remember the 1973 oil shock, but none of them had this confluence of all the events and the disruption of demand, disruption of supply, the disruption of networks. And all that compounded by the fact that most of us are forced to stay home because of social distancing. Many people are losing jobs, and all this confluence of multiple impacts is fairly unprecedented.

 

Tom Raftery [00:07:18] It is. And we here in Spain, they’re now starting to allow some sectors go back to work again in a very limited capacity. But it looks like we’re coming out, you know, slowly, the other end of it. The curve is being flattened, but it’s still… There’s not going to be a vaccine widely available until mid to late 2021. So social distancing and those kind of measures you know, to Odell’s point in the workplace for health and safety. That’s going to be an ongoing factor and possibly access to supplies and things like that we can deal with these kind of things short term but is this something that we can manage for 18 months?

 

Dr Dan Bhide [00:08:11] I guess it’s more do we have a choice about how to manage it. You know one of the CEOs of a big retailer said, “Hey, you know what? There is no playbook. We are doing this on the fly.” And speaking to another client recently, he said because of social distancing requirements we really can’t even have the whole production staff on the floor, for example. And if earlier we were running the line with, say, 20 people on the line, now we have to make do with ten or twelve of them because of social distancing. And that means we are running our lines at says 60-70% of the capacity than I would usual. Now, this is where the ability to look at all kinds of what/if analysis now that I’m running at 70% for example can I open up the third shift? Can I open up Saturdays? And if I do that, do I have an ability to catch up on my demand? That kind of ability to on the fly do these kinds of different analysis and then figure alternative now that you know you have a different harder constraint of not getting everybody on the production floor becomes an issue. And how quickly are you able to do that kind of analysis to have right kind of decisions made becomes a significant challen. If you digitise your supply chains, then that kind of what/if capability becomes a little easier to achieve then if things are still disconnected and maybe worst, even on paper.

 

Tom Raftery [00:09:32] In the webinar that you guys ran what were the primary concerns that people had when they joined the webinar? What were the questions they were asking and what kind of answers did you have for them?

 

Odell Smith [00:09:44] I guess some of the main concerns were around again, back to the data thing trying to be able to understand the impact of a particular situation. In many cases there are there are several different impacts even inside of some of the same companies. Right. You can have massively increased demand in one business unit and devastatingly loss demand in another business unit even inside of the same corporation. So being able to quickly be able to get information on where we think that’s going to go and what the impact of that is going to be is important and being able to simulate what, how am I going to solve whichever side of that that I’m on? One of the things about this flattening the curve thing, Tom, is I get it. It’s important for for the medical response to this. But what that does, in effect is an indeterminately amount extend this issue and extend the supply chain impact for what you’re talking about, a very long duration. Right. That’s a whole purpose of that model of flattening that curve. And and so trying to to be able to put some data, the people that we were talking to were very concerned about how how to model that. Right. So that they could so that they could plan effectively and then try to, you know, come up with different scenarios where they might be able to make it through. There’s a lot of capability to do things to to try to substitute products where available and to be able to maybe, maybe delay demand spikes or, you know, change promotions and and pricing things that were going to affect demand and that type of thing to be able to shift some of those things around. Those are those are very doable. Those wind up affecting then the supply and how it’s supply is going to be able to make that. So there’s a balance that you can do with that. But being able to simulate that and see that have the visibility of those is some of the biggest concern, because a lot of people have not put in some of some of the new capabilities to be able to visualise that stuff. And that’s that’s an important piece of this concern anyway. Not being able to see.

 

Tom Raftery [00:12:30] So Odell, if I remember correctly, I think you said you’ve been in supply chain for 26 years. Yes. If this had happened 25 years ago as opposed to today you know, what are the differences in the supply chain solutions that are available today versus ones that were available 20 odd years ago? What can companies do now that they couldn’t do then? I mean, we were chatting away here on a podcast recording platform that allows us to see each other’s faces. We’re working from home using Zoom and similar technologies, things that could not have happened 25 years ago. How does the supply chain world compare?

 

Odell Smith [00:13:14] It’s even it’s it’s hard to even imagine back then the the being able to have a) this happening, but but the capability of being able to to function as well as we’re able to. I mean, there is still an amazing amount of business that’s being accomplished because of technology, just like what you’re what you’re describing here. So as an engineer, before you know, it got into the I.T. side of the supply chain working in manufacturing there, there were there were these same type of of of problems. But it seems like there has been this kind of just in time mentality that’s that has really shortened the supply chain, has reduced a lot of cost and has and has taken a lot of the flexibility out of the supply chain over the last several years. And and that that flexibility then is has done a great thing for reducing prices and increasing margins. And it’s a it’s a great thing for the business. But it also I think this is a bit philosophical, but it’s kind of, we’ve been in great times, you know, over the last over the last several years. And and that the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place. Back to your technology question. So there’s going to be a focus on that going forward that hasn’t been there in years. And this whole just in case logic that we discussed in our webinar is going to be much more tied to the just-in-time thing and there’s going to be a balance there. The new technologies that we’ve that we’ve seen come available, especially in the digital revolution, where we’re able to quickly put data in to a system and be able to get valuable results out of it from partners is probably one of the biggest, biggest benefits. So our being able to see the entire supply chain and then be able to collaborate with the cloud technologies with with partners on on from supplier side as well as in the in our manufacturing and processing as well as through to the end customer. And being able to collaborate is the biggest advantage that I’ve seen here in the technology. And that’s that’s a large piece of that is going from on-premise to the cloud. Right. And those those are the biggest the the biggest advantages. And then the tool sets inside of those that that allow more flexibility and visibility in the analytics that are real-time, where we used to have to wait days, you know, to be able to get data in a place where we could do analytics on it. Those are the main pieces for me.

 

Tom Raftery [00:16:32] All right. Dan, have you anything to add there?

 

Dr Dan Bhide [00:16:34] Sure. You know, just as the technology has evolved, you know, most of us hadn’t. Maybe the word digital supply chain wasn’t coined 25 years ago. Now it’s a reality for us. You know, and some of us had been leaders, some companies had been forced to follow that, you know. The expectations of consumers have changed as well over the last 25 years, you know, when you thought of getting a product within a week was good enough. Now, here are the Amazons of the world offering the products overnight or even sometimes the same day. So some brick and morter have been forced to go there as well. What that has done is we all talk about the 3 V’s of supply chain, the velocity of supply chain has been forced to increase big time. The visibility also is required to go literally not just within your own silos or breaking the silos, now we’re talking about visibility across the whole network you know from supplier’s supplier to customers, customers. And then there’s also expectation of variability how do I reduce my variability in my supply plan so that I can assure for Tom delivery of his product that he ordered tomorrow morning or even today evening. So expectation of reduced variability, expectation of increasing velocity and expectation of increased visibility has been forced upon the client companies as well.

 

Tom Raftery [00:17:51] And we’re at to almost 18 minutes mark now and I like to keep this podcast to about 20 minutes. For people who are listening who were unable to attend your webinar. What advice would you give them going forward where we’re headed into a world of possibly 18 months of social distancing. You know, maybe there’s a vaccine comes out sooner and maybe it’s, you know, nine or twelve months or whatever it is. But we’re heading into a world of a lot of unknowns, you know, and we’ve had this triple whammy hit us now, what advice would you give to people who are running supply chains now moving forward?

 

Dr Dan Bhide [00:18:33] You know, one of the things a caution is that this priming the pump, once things start getting normalised to a new normal, I mean, is going to be excruciatingly complex and time consuming. So that is something that they’re already dealing with. But this priming the pump, meaning getting back to a new normal, is going to take weeks, possibly months to happen. And that means that we have to now look beyond the short-term mid-term plans to look at the Long-Term Plans, having the business continuity plans in place and also literally doing a monthly new scenario’s of what/if, and to mitigate the risk and most importantly focus on the fact that what you do now is going to redefine your competitive ecosystem as well, because some companies will be able to handle this well, some won’t. And that’s going to create a new normal and a new competitive landscape. So see this as much as an opportunity, as a disruption or threat.

 

Tom Raftery [00:19:32] Ok Odell…

 

Odell Smith [00:19:32] So there’s there’s a lot of companies where executives are down on the shop floor packing warehouse boxes right now, trying to to to be able to just get through this. Right. And and that is absolutely required. You just have to do what you have to do to be able to make to make this work. All hands on deck. But at the same time, there has to be some level of strategy where you do like Dan was saying, where you you look for ways that you can take advantage of this and that you can get out of execution and start trying to do some of that forward planning and being able to being able to focus on the entire chain inside of your corporation with a value chain, but the entire supply chain and work on collaboration, with your suppliers and with your customers, to see what they are seeing right as what their demand is and to be able to figure out how you can best supply that, you have to you have to spend some time on that, even in the middle of, you know, working 14 hours a day packing boxes to try to get things out. And so the it’s not necessarily a time to to go and do a full system implementation, but there are there are ways that technology can help in this digitisation, the digitisation that we’ve just talked about. That was a little bit tough to get out! There are there are ways that that you can use information to help expedite that collaboration. And I couldn’t I couldn’t emphasize the collaboration with customers and vendors enough in that scenario.

 

Tom Raftery [00:21:25] OK. Last question, guys. Is there anything that we haven’t talked about that you think we should have talked about? Anything that you’d like to bring up that we haven’t hit on just yet?

 

Dr Dan Bhide [00:21:36] One quick comment from me and as I was referring to earlier, it’s one thing to comprehend the big picture and talk about mitigation strategies. I would align that to maybe a 80 to a 20 thousand feet level thinking, but it’s a whole another world translating those mitigation strategies into really what enables us to translate that mitigation strategy into action plans. So this is where the expertise matters. How do you translate the so-called one-liner mitigation strategy into 20-30 action items or tasks, whether they’re on the system side, on the people side, on the process side, on the policies and practices side, how do you come up with the new KPIs for resilience as against traditional KPIs for efficiency and just-in-time because those are the challenges that one needs to really think through.

 

Tom Raftery [00:22:31] Odell…

 

Odell Smith [00:22:31] I think being able to look back at this and be able to think of what worked and what didn’t work is going to what is going to wind up being of value as well. It’s it’s almost impossible to do that while you’re in the trenches. But take take notes about about what’s going on and and what worked and what didn’t work and then where you might want to, where you might want to have things perform differently in the future. Most of our planning solutions are are based on data that happened in the past. These anomalistic times that we’re in are going to cause many, many outliers. But there is also going to be a new normal that’s going to come out of that. There’s going to have to be a focus and an analysis on that data to have good plans going forward in the future. And that’s probably a complete separate podcast discussion around innovations and that type of thing. And, you know, being able to use advanced machine learning and AI to be able to support some of those quick decisions. But that anyway, that’s that’s that’s something that’s necessary to do for sure.

 

Tom Raftery [00:23:52] Gentlemen, thank you very much. If people want to know more about yourselves, Dan and Ordell or MASC Gee, where would you have me point them?

 

Dr Dan Bhide [00:24:01] They can go to my supply chain group dot com and they can call us as well. But my supply chain group dot com, one word is the place they can reach out to us.

 

Tom Raftery [00:24:13] In that case, gentlemen, thank you very much for your time and your expertise today. It’s been it’s been a pleasure talking to you.

 

Dr Dan Bhide [00:24:20] Thanks for having us Tom. It’s my pleasure.

 

Odell Smith [00:24:22] Yes. Really enjoyed it. Thanks for the time.

 

Tom Raftery [00:24:30] OK. We’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot com if you’d like to show. Please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find a show.

 

Tom Raftery [00:24:57] Thanks. Catch you all next time.

 

[00:28:56] Super. Super. That’s great. Claudio’s that’s been fantastic. Thanks a million for coming on the show today.

 

[00:29:10] OK, we’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot com if you’d like to show. Please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find show.

 

[00:29:38] Thanks. Catch you all next time.

 

And if you want to know more about any of SAP’s Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don’t forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

 

 

 

Life in Spain under lockdown

Today is April 14th 2020 and it is our 32nd day under the Coronavirus lockdown orders here in Spain.

 

I thought I’d paint a little picture for you of how life has been for us since the state of emergency was declared by the government on March 14th. Spain has one of the tightest lockdowns outside of China with people being required to stay home except for trips to the grocery store, trips to the pharmacy for medication, and to walk dogs. Dog walking can only be undertaken by a single adult (no couples, no kids) from a household and has to be within close proximity to home. Fines starting at €600 and up to €30,000 are meted out for any infractions.

Sign announcing Parks Closed
Sign announcing Parks Closed

I took my dogs out for a walk on the first morning of the lockdown and passing a kids playground I saw a sign from the local council stating that the park was closed due to the Coronavirus. Schools had been shut the previous day so the council didn’t want children congregating in parks, potentially infecting one another. The sign was dated the day before the the state of emergency lockdown, and so the Stay at Home order very quickly made it redundant!

 

Empty meat counter shelves
Empty meat counter shelves

I went grocery shopping on day one as well, and found that while there was no shortage of toilet roll in the shop (!), the meat and fish counters had been stripped bare. The only thing remaining was a few plant based Beyond Meat burgers, so I finally had an excuse to introduce them to my family (two of us loved them, the other two, not so much).

 

Store sign requiring use of gloves
Store sign requiring use of gloves

In the following days, the supermarkets’ supply chains stepped up and now there are no shortages in the stores. Practices in shopping have changed though. Shops are pushing people to shop online and choose home delivery as much as possible. Delivery times are typically reasonable and usually come within 24-48 hours though you can be unlucky. If you do need to go to the store, shops now provide disposable gloves for shoppers and require their use when using a trolly or shopping basket.

 

Keep your distance and pay by credit card
Keep your distance and pay by credit card

Physical distancing is enforced when queuing to pay, and most shops now shun cash in favour of contactless credit card payments.

Interestingly Amazon delivery times are way out of whack. I don’t know if this is just a Spanish thing, but ever since the pandemic hit delivery estimates have been in the order of weeks for most orders. However, having then placed the order, it more often than not arrives in a day or two rather than the weeks that had been estimated. I’m assuming Amazon are still adjusting their logistics, taking on lots more companies, onboarding them, etc. so this too will be sorted in time. The good thing is that they are erring on the safe side, not promising delivery in a day or two, and then taking weeks to deliver!

 

Graph of penetration of Fibre to the Home internet connections by country
Graph of penetration of Fibre to the Home internet connections by country

Apart from the good weather, another advantage of being based in Spain is that at 44%, Spain has by a significant margin the highest penetration of Fibre to the Home (FttH) internet connections of any country (Portugal is next closest with 37%). This investment in infrastructure is now paying big dividends with so many people needing to work, or continue their education online. My home connection is a 600mb synchronous connection, so four people simultaneously video conferencing doesn’t put too much strain on the connection. Very occasionally there are glitches in the video connections, but I put that down to upstream congestion with the increased traffic on the network.

Classes are being delivered online
Classes are being delivered online

Classes are being delivered online using a combination of Zoom, and Google Classroom. Fortunately the school my sons attend made a decision a couple of years back to issue all the kids with iPads, and deliver all their educational material that way (i.e. they have no physical textbooks). The unintended positive consequence is that all the kids in the school have their own tablet containing their curriculum, and because of the high penetration of fibre, most have a decent internet connection. As a result of this, the school hit the ground running and the transition to delivering lessons online was made that much easier. This is a public school btw.

 

Virtual family lunch
Virtual family lunch

Other changes – traditional big extended family lunches at weekends have been replaced by virtual get togethers with the family on Zoom. It is not the same, to be sure but it helps maintain a semblance of normality.

Finally, I do venture out to walk the dogs daily. Part of my walk brings me past a (formerly) busy intersection. Now that intersection is eerily still with only the very occasional car passing. And now you hear the sound of birdsong there instead of the constant growl of heavy traffic.

 

Air quality February 2020
Air quality February 2020

 

Air quality March 2020
Air quality March 2020

The air quality has improved, as you’d expect as well. I carry a Plume Flow personal air quality meter with me at all times so I have air quality data for this area going back many months. The two screens above show the air quality in February (before the lockdown) and March (two weeks after the lockdown) respectively with the February screen having large portions of the air quality map being either yellow (moderate air quality with an Air Quality Index (AQI) of 21-50) or red (high pollution with an AQI of 51-100). Two weeks after the lockdown though and the air quality index is reading under 20 almost for the entire walk, which is a vast improvement.

 

Daily new Coronavirus cases in Spain
Daily new Coronavirus cases in Spain

Daily new deaths data from Coronavirus in Spain
Daily new deaths data from Coronavirus in Spain

These last few weeks of lockdown from the pandemic haven’t been easy, there is no doubt. But the outcome speaks for itself. The cleaner air is welcome, sure. But the fall in new infections and the fall in the number of people dying daily from this pandemic here in Spain is very welcome. If you are in the early stages of a lockdown, look at those two graphs. This will happen where you are too if the proper measures are taken to enact and enforce a lockdown.

 

Yesterday the Spanish government partially re-opened sectors of the economy to allow some people back to work. They required everyone travelling on public transport to wear face masks and they had police and volunteers in every public transport station handing out masks to those people who didn’t have any.

Was it too soon to re-open the economy? Possibly it was. We will know in one-two weeks time if we see the number of new cases increase once more. We are all just feeling our way in this new world. Until there is a universally available vaccine I think we will have to proceed extremely cautiously on all fronts. Stay healthy, stay safe, and above all, stay SANE!!!

Digital Supply Chain, Climate 21, and Climate Change – a chat with Toby Croucher

It is April 2020 and we are currently in the middle of the Covid-19 Coronavirus pandemic, however we will develop a vaccine  for this virus, and so this crisis will finally pass. Unfortunately there is no similar “easy cure” for climate change.

With that in mind, a huge amount of an organisation’s carbon footprint comes from its supply chain, so when I heard about SAP’s new Climate 21 initiative, I was keen to get one of the core team, Toby Croucher to come on the podcast to talk about it.

Toby agreed and we had a great chat talking about how the Climate 21 initiative will help companies calculate, manage, and reduce the carbon footprint of their supply chain. Enjoy.

Click on the player above to hear our conversation and/or check out the transcript below:

Tom Raftery [00:00:00] Whereas if I’m looking down through my supply chain of different suppliers, it’s very difficult for me to tell who is using renewable energy or not, you know, which cloud provider do I choose? Because do I know their energy sources? Which logistics company do I use? Do I know which of them are using electric vehicles or which of them are using diesel? You know, that’s not exposed today.

 

Tom Raftery [00:00:27] Good morning, good afternoon or good evening. Wherever you are in the world, this is the digital supply chain podcast and I am your host, Tom Raftery.

 

Tom Raftery [00:00:38] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery with SAP and my special guest on the show today is Toby. Toby, would you like to introduce yourself?

 

Toby Croucher [00:00:47] Hi, Tom. Yeah thanks. My name’s Toby Croucher. I’m the energy and natural resource industry lead for the EMEA North region. There’s a Nordics and France UK, and Benelux. Good to talk with you Tom.

 

Tom Raftery [00:01:06] Thanks. Thanks. So when I want to get you on the show, Toby, because, you know, we’re gonna talk about a thing called an initiative of as SAP’s called Climate 21. And the reason I wanted to talk about that is because supply chains are a massive part of a company’s carbon footprint. And the Climate 21 initiative is is an initiative that SAP is, you know, getting into to try and address that. So and you’re you’re part of the core Climate 21 team. So I decided to have you on the show so we could talk a little bit about it. And, you know, some of the reasons behind it, what it hopes to address, where the future is going, that kind of thing. So could you, you know, maybe start off give me a little bit of a background of Climate 21. What is it and why is it.

 

Toby Croucher [00:01:58] Yeah, well, I mean, climate’s not been. It’s not it’s not a new issue. It’s not a new challenge, as it were, it’s been you know, it’s been in the in the public domain to varying degrees, you know, for decades, really. Certainly since the early 2000s. But but last year, last year in particular, there’s an entirely new level of exposure in society as to what’s happening with the climate. What was happening with our response and the gap between our ambition you know, globally, our ambition to stabilize our climate between one, half, two degrees from the from the Paris accord, the U.N. agreements that, you know, 73 countries now have signed up to be net zero. And a level of action going on, actually. And, you know, from an SAP perspective, you know, when you look at CO2, of all of the issues relating to sustainability, it’s the only one as a has a globally consistent currency. It means the same thing. And a ton of a ton of CO2 means the same thing wherever you are in the world.

 

Tom Raftery [00:03:11] There’s no there’s no difference between a French ton of CO2 and an American icon of CO2.

 

Toby Croucher [00:03:17] As as the head of the international agency said it, CO2 doesn’t need a passport. And you know, it can be converted. Different greenhouse gases can be converted into the equivalent CO2 now. So it really lends itself actually to a transactional system. And it’s spread. CO2 is spread in terms of it’s it’s it’s the output of CO2 across industries, through supply chains, all the way to customers, all the way from the lip of the primary energy industries. So it’s got it’s got a certain kind of attributes CO2 that really lend itself to SAp’s heritage. It’s it’s it relates to material flows. And, you know, to a large extent, all the issues around managing our approach to climate change have been you know, how do we get the accounting right globally? How do we get the accounting right all the way from the global system of accounting for CO2 down to the national decarbonisation targets, which which, you know, most of the countries we live in have; then down to an industry level. And that, you know, can be inside trading schemes like the EU have. And then inside to a company level. And then when you’re in a company, actually, you go start to look across all your activities globally. And that constitutes your footprint, whether that’s direct, scope one or indirect scope two or scope three, which is there all the way through your supply chain. And the moment the world doesn’t have an effective, reliable, consistent way of doing it, it fits over well with that SAP’s heritage and SAP’s capabilities. The program started off as week I think we set September, October last year, we started moving into action in this with, you know, with our Board level sponsorship.

 

Tom Raftery [00:05:17] OK. So before I turned the recorder on, we had a little bit of a discussion about this, and one of the topics that we said we would chat about was the idea of a carbon budget. Now, the idea of a carbon budget is something that a lot of people may be unfamiliar with. So I think the way I frame it to people and, you know, feel free to jump in. But the way I frame it to people is that we have, as you rightly pointed out from the Paris Climate Accord in 2015, we have internationally signed up to trying to limit the global warming to one and a half degrees C, between 1.5 degrees C and maximum 2 degrees C, ideally one and a half and at worst 2 degrees C is what, one hundred and ninety five countries signed off on. We know where we are today. We’re already at one. So that leaves us between a half and one degree C to go. And we know to get from where we are today to one and a half to two degrees C. We have to pump X gigatons of CO2 into the climate to reach our target of 1.5 to 2 degrees C and that X is known, it is just physics. It is about a thousand gigatons. And the issue around the carbon budget is that the fossil fuel companies have proven reserves of about 3000 gigatons. So it becomes kind of challenging, I think, for organizations. So but we do we have that budget. We know where we want to get to or where we want to stop at. And  I mean, for companies, for organizations to figure it out where they are themselves, they need some kind of accounting right?.

 

Toby Croucher [00:07:03] Yeah, and I think, you know, you’re absolutely you’re absolutely right. You know, I mean, I I’ve I’ve explained that, you know, when I explain to my children, I explain it in the same way you think about calories, you know. I mean, it’s there are ways in which there are ways in which the world can absorb carbon sinks, absorb, you know, oceans and forests that suck up. And there are their outputs. There are ways in which it’s produced. And we’ve got to get a gigaton is a lot. But actually, you know, current rates of our current rates of consumption or carbon emissions, we’re gonna get I think it’s between eight and ten years we’ve used up all our budget. OK, if you’re dieting and someone’s that you couldn’t go over 2500 calories a day, you know. You know, you’ve got there by lunchtime. You know, and it’s it’s not that many years left now as you start to as you start to cascade that down, because that’s very, very hard for an organisation. Is is you you cascade that down until what are you what are you what are your targets and where are you going to go? Now, the interesting thing is, you know, and you hear this now increasingly from, you know, from the large international companies, you know, both in the energy intensive, industries and the consumer end and all the way through the supply chains. You can’t do this alone. You know, you can’t as a company continue to and that’s where the analogy breaks down. You can’t continue to squeeze your own emissions. You’ve got to get visibility through them, through and through your transactions. So, you know, we had a discussion with a company only this morning that produces industrial materials. And they said, well, you know, we really want to supply these these pumps. So the electricity they use is less and less and less actually are ah, you know, our customers are able to run these in a low carbon way. But actually, we get inputs to build them. We want to know how much carbon is in there. And and essentially this you know, this budgetry challenge, this carbon budget challenge is going to have is going to have to two parts to it. One part is is leaving fossil fuels in the ground. And those assets investors are calling those assets stranded assets. And the valuation of those companies that used to have a reserve to production ratio, which is “I’ve got loads in the bank, we can burn later”. That’s not going to apply anymore. That’s half of it. So half of it is is decarbonizing primary energy supply, which is you know there is options for that around hydrogen and bio and green electrons. The other half actually is products and services and squeezing those and in the same way, you know, if you if you want to lose weight, you need a good pair of scales. That’s second half for that second half that, you know, that, you know, decarbonise and squeezing all of the grams and kilos and tons and kilotons, not the gigatons a billion tonnes, but making all those small decisions, you know, you know, now just, you know, not having milk in your coffee, type decisions to make those types of decisions actually is going to take a very, very different approach to your future and your transactional systems.

 

Tom Raftery [00:10:28] And I think it’s it’s important as well, because in in, you know, take your example in the idea of a diet. It’s very easy going through the the aisles of the grocery store to pick up the items and look at the label on them to see how many you know, how much carbohydrate is in them or how much protein or fat is in them, you know, per 100 grams or whatever it is. Whereas if I’m looking down through my supply chain at different suppliers, it’s very difficult for me to tell who is using renewable energy or not. You know, which cloud provider do I choose? Because do I know their energy sources? Which which logistics company do I use? Do I know which of them are using electric vehicles or which of them are using diesel? You know, that’s not exposed today.

 

Toby Croucher [00:11:18] No, it’s not. And you know that there’s a big element of trust. You know, public trust in relation to, you know, I mean, you saw with Volkswagen’s challenges around their , you know, that their emissions monitoring dieselgate. Exactly. Dieselgate. And I think, you know, what we’re starting to build when we start to look at Climate 21 is an ability to, you know, to have that visibility and to be able to manage that and have that ledger that passes through as those as those products and services move down through the industrial, ultimately to us as consumers I mean, the notion has been, you know, the notion has been, you know, presented that individuals should have a carbon budget, you know, depending on the population growth projections it’s somewhere between, you know, two tons and four tons or six tons. But it’s it’s a budget now at the moment you know, very few of us would know whether we were underweight or overweight in terms of are we doing the right thing. Now, you know, you know, you’ve got photovoltaics on your roof. You know, it’s a it’s a big decision to make in a way to dieting. You don’t eat cake. You don’t eat cake if you’re dieting. But the smaller decisions, the small decisions around how to source which which supplier will source materials, can you change? What’s the substitution options you’ve got? These traditionally these lifecycle assessments are these lifecycle assessments have been done on a on a singular basis for a single product or a single service. And the you know, the the oil and gas industry did it with biofuels. Right? Well, sort of biofuels, but it becomes. But to do it once is a manual exercise to do it systematically, continually across all your business process. I mean, that’s you know, that’s an entirely different undertaking. But actually, that’s the only way you’re going to get the assurance through your supply chain. You’re gonna get the visibility through your supply chain. You’re going to get an ability to have those numbers, not just assured, as they are currently in that scope three area. But verified, reported both to investors to say, I’m decarbonising my business and ultimately to your your customers, whether it b2b or b2c. And that level of trust is going to have to come with a completely transactional level. I mean, currently, you know, many of our customers, if not most report CO2 emissions reporting is very important. And that will remain important for lots of reasons. But it’s the longer term is the management of them that’s going to become so, so important. And the ability to tell a story about how you’re effectively managing and effectively decarbonizing not just your business strategy book, but your supply chains as well.

 

Tom Raftery [00:14:02] OK. So we’re going to help with the calculation and transparency of emissions. Where else is this going?

 

Toby Croucher [00:14:14] Well, I mean, if you if you look at it, if you if you look at the discussions we’re having with with many of our customers, if you look at the way you CO2 is not it’s not singular issue. It’s related to, you know, land-use change, for example. It’s related to, you know, there are in some parts of the world. It is a very really a good example. You take you know, you’re low carbon energy is is actually a secondary importance to air quality and NOxand SOx and those issues. And the intent here is not to have a singular transactional system around CO2. I mean CO2 as I said at the beginning, it got certain qualities. And it’s a it’s a it’s a global it’s it’s a global priority, of course, for reasons we know well. But if we start to look at our strategy, it’s very much towards saying, let’s look at let’s look at the traditional non-financial flows, things that fit under the broad banner of sustainability. Let’s look at the non-financial flows and see how we start to build those in into our our ERP proposition. So Climate 21 is it is it is a kind of leading program that’s gonna be followed with, you know, us evaluating how it’s up, to what extent can we build this transactional future that historically has been, you know, hasn’t been included in with an organisation decision making has been reported on up in the manage and optimise. How do we start to build that in strategically? And that’s it. I mean, that’s it’s incredibly. It is. It is something, actually. You know, the world. And I said this to you, Tom, before we started the call. This idea of, you know, ecosystem services and the services that nature provides, if you like. I mean, that’s, you know, since the beginning of time, the the ultimate supply chain has been that nature itself, which we benefitted from a tremendous reliability. You know, it’s it’s it’s free at point of consumption. I mean, it’s got all the qualities about it now. You know, if you start to build that into then and you’re in your industrial systems, it’s a huge leap. It’s a huge leap.

 

Tom Raftery [00:16:29] Very true. We are, today is the first of April we’re recording in the middle of a global pandemic. The Covid-19 Coronavirus pandemic. Are you seeing any parallels between what we’re seeing in the pandemic and the whole climate issue?

 

Toby Croucher [00:16:48] There’s an incredible amount being written actually at the moment about the link between current employment, I think, because, you know, for very obvious and actually rightfully so, you know that the Coronavirus situation has knocked climate change off the off the pedestal of global concerns. And that’s absolutely correct. I think what’s really interesting what is really interesting with Corona. And this is really this is really, I think, important for the climate debate is we’re seeing most of the reporting that we’re receiving as members of society is based around what the modelling is telling us, the data in terms of how we’re doing, you know, in terms of flattening the curve and the forecast and, you know, the idea of the idea of being, you know, relying on on data to see where you are, you know, modelling to see what could happen and then and then forecasting your interventions to see where that’s going to get you to against, certain outcomes you don’t want. That’s… And we’ve been very science led. I must say, I think that the way we’re responding as companies, we’re being led by the science. We certainly see that in the UK. It’s been you know, it’s that the science is leading our response. Now I think that’s very promising for the climate agenda, particularly in this next decade that is being called that the decade of delivery. If we don’t if we don’t crack, if we don’t crack some of these challenges in the next 10 years. And we’ve had 20 years to think about it. And we don’t get it in the next 10 years. We’re in a very, very difficult position. So so I think there’s something there’s something positive around corona. And we may see it. We may see a return to science and science based decision making being led by data, which, again, we have a role in. I think that’s very, very positive. I think the risk for me is the oil prices has dropped. It’s it’s it’s low. And actually one way to one way to stimulate, you know, the post-corona recovery could bake-in could lock in some sort of high carbon outcomes that will lose time. And we don’t have you know, we don’t have that time to lose. You know, I think the drop in in consumption during the Coronavirus. We’ll eat that up in a few months. That won’t really matter. It’s about trying to stimulate economies. And there’s such an oversupply of fossil fuels at the moment that if that squeezes, you know, other investments that could be made, that that would be challenging. The final thing I would say with corona is, is, you know, with running all the risk management, we can we’re doing as much as we can. As societies in the hope there’s going to be a remedy, a vaccine, something, something at some point in future, we know we’ll come in and take this particular problem away as long as we can reduce, reduce what’s happening in the interim. That silver bullet will not present herself with with climate change this decade. There isn’t you know, there isn’t a singular answer like that. And that’s, I think, why it’s been such an such a difficult challenge over the past couple decades, because there’s so many dimensions to it. You know, fiscal, technology, societal, I mean, it’s a hundred years worth of energy infrastructure has been built around the world, around, you know. And it’s a tremendously efficient oil and gas and coal as well are very energy dense think they’re great fuels. If it wasn’t for that pesky CO2. So I think right. I think it’s there’s some things we can learn from corona, I feel cautiously positive.

 

Tom Raftery [00:20:30] When one of the things that, hey, I try and get people to visualise is, you know, what is a ton? You know, you can think of like a Mini Cooper as being roughly a ton and a gigaton is one billion tons. So try and picture a billion Mini Coopers and then try and picture a way of hoovering 10 billion Mini Coopers out of the atmosphere, every year, and storing them somewhere. And that’s the kind of level of challenge we’re at, and 10 billion is probably not enough to be hoovering out of the atmosphere every year. We obviously need to stop putting it in, putting them into the atmosphere in the first place. But we’ll have to try and suck them out as well. And that’s an even bigger challenge, I think.

 

Toby Croucher [00:21:22] Yeah, I think we land use land use will play a role, you know, to kind of recarbonise reforestation. Yeah, that that will play a role. You know, it’s a policy decision as to whether that’s linked as an offset or not. You know, I think you have to be careful with with offsets, you know. But but and sequestrations, carbon capture and storage actually finding it and, you know, putting in an aquifer, putting in a geological formation. But there you need a you know, you you kind of need a big single point geography. The geography doesn’t work. So it’s you know, that’s that’s that’s challenging as well. And that’s where you start to look at you know, you start to look at solving this this challenge and you have to set as a lot of energy efficiency needed, a lot of land use changes. You’re going to have to rely on, you know, the three you know, the three kind of energy supply vectors around bio and hydrogen where appropriate. And then, you know, green electrons from renewables, you’re going to have to try and sequester. And then you’re going to have to have, you know, buildings and different industrial solutions. So buildings, heating, cooling buildings. Mobility is going to have to be addressed. And you start to see actually and the whole thing, that whole picture of activity is gonna have to it will generate a whole new set of business models of course. There’ll be a whole supply chain associated around it, but it’s going to in a whole system transaction to make sure that it all adds up. And there is a global accounting system which which links them on the micro to the macro. And I think it’s going to be it’s going to be very. Yeah, it’s gonna be very interesting to see how this how this plays.

 

Tom Raftery [00:23:12] Toby we’re coming to the end of the podcast. We’ve gone 22, 23 minutes at this point. Is there as a last question, is there any question I have not asked you that you wish I had?

 

Toby Croucher [00:23:27] No, I think, you know, I think it is a typical job interview, kind of question, where would you know where? Would you like to be in 10 years time or where would you like to where would you like to have got this agenda to in in in 10 years time? And that’s probably the question. Are you going to ask that question?

 

Tom Raftery [00:23:51] You asked it. Go ahead and answer it now!

 

Toby Croucher [00:23:57] Well, I think will be what I think will be great, actually. And I see I see that there’s very much there’s an element of the role with this in SAP is the market and markets and, you know, and customers and investors and employees over the next decade. Very much so if we’re to stand a chance of hitting our 2050 targets and seeing ourselves in a good place for, you know, future generations. The companies do well in this are going to have to be you know, it’s going to have to be clear they’re winning and they’re doing well and they are performing well. And I think that’s that’s where you start to see flows of talent, flows of capital, you know, access to markets, new markets, going to the companies that get this, you know, that really get this that really get the fact that they’ve got a build-in, you know, a new system of transaction. They’ve got to take these issues from being historically reported once a year, you know, in a report which often doesn’t really get read by very many people and pushed out the door, you know, with risks, all those associated risks of, you know, it being marketing, they’ve got to build it in actually all the routine way of running a business. And I think when that happens and when society responds and consumers respond, those companies will win. And that they’ll not just win in traditional ways, that they’ll win in terms of their market share. And I I think we’ve started to see that, you know, the early seeds of that we have done before, you know, but then we get hit with a financial crisis or other crisis. But I think if we’re looking for where I want to get to in 10 years time and the role SAP could play, I think it’s very much in shifting that, you know, shifting that gap between the companies that are really, you know, doing this and those that aren’t and that gap, you know, there’ll be a high penalty to pay for the companies that don’t manage to get across that gap and start building this way of working and become, you know, essentially sustainable businesses.

 

Tom Raftery [00:26:14] Yeah. Cool, cool, cool, Toby. If people want to know more about Toby or about SAP Climate 21 initiative or about, you know, any anything else you think they might want to know about or where we’re should/ where would I direct them to go?

 

Toby Croucher [00:26:36] Within SAP we have a Jam site. There’s an internal Jam site for our Internal employees. We have an external point of view. I mean, I know as I said, you know, I think just before we started the conversation Tom we’re in, build and develop, you know, where we were kind of, you know, a pretty early stages but we’re moving very, very fast. But either, you know, comes to me there’s a there’s a core team working this, you know, right now. I mean, you know, organizationally it will grow and expand over time as we start to build up, you know, our go to market and our, you know, engage with customers more widely. So use the jam internally. Or come through the Climate 21 core team. I’m happy to fill any any questions around our approach.

 

Tom Raftery [00:27:27] Super, super, Toby. That’s been fantastic. Thanks a million for joining me on the show today.

 

Toby Croucher [00:27:32] My pleasure. Thanks a lot.

 

Tom Raftery [00:27:37] OK, we’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SAP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot com. If you’d like to show, please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people. To find the show. Thanks. Catch you all next time.

 

 

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