The Logistics Issues podcast: Alex Saric of Ivalua on pending local weather threat disclosure guidelines | Season 4 Episode 7

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Transcript

David Maloney, Editorial Director, DC Velocity  00:01

Newly proposed local weather guidelines and their influence on provide chains. The Postal Service fights again. And industrial racking enjoys a development spurt.

Pull up a chair and be part of us because the editors of DC Velocity talk about these tales, in addition to information and provide chain developments, on this week’s Logistics Issues podcast.

Hello, I am Dave Maloney. I am the group editorial director at DC Velocity. Welcome.

Logistics Issues is sponsored by TGW. TGW is a number one world programs integrator for automated warehouse options. They are a one-stop supplier, designing, manufacturing, implementing, and sustaining end-to-end success options for URBN, Hole, Jasco, TVH, and extra. Distribution community administration is changing into all of the more difficult. Grasp the unpredictable with TGW, a number one world programs integrator. Go to tgw-group.com for extra data.

As traditional, our DC Velocity senior editors Ben Ames and Victoria Kickham shall be alongside to supply their insights into the highest tales of this week. However to start right now: many might not be conscious, however new climate-risk disclosure guidelines might quickly go into impact, they usually might have some important results on provide chains. To seek out out the small print of what all of them imply, here is Victoria was right now’s visitor. Victoria.

Victoria Kickham, Senior Editor, DC Velocity  01:27

Thanks, Dave. Our visitor right now is Alex Saric. Alex is chief advertising officer at procurement software program agency Ivalua, and as you say, he is right here to debate proposed SEC climate-risk disclosure guidelines and their influence on provide chains. Welcome, Alex.

Alex Saric, Chief Advertising Officer, Ivalua  01:43

Thanks for having me.

Victoria Kickham, Senior Editor, DC Velocity  01:45

So the Securities and Alternate Fee’s proposed climate-risk disclosure rule might have far-reaching results throughout the provision chain. As I perceive it, it requires publicly traded corporations to open up to traders how their operations have an effect on the local weather and contribute to carbon emissions. Are you able to clarify what that is all about, when the foundations might take impact, and inform us what your position is in serving to folks perceive this?

Alex Saric, Chief Advertising Officer, Ivalua  02:10

Positive. So there’s been rising curiosity in emissions coming from enterprise, and each so far as their influence on the atmosphere, and in addition the potential dangers of the enterprise outcomes themselves, however there actually hasn’t been any constant requirements for measuring or reporting on emissions, and that is led to loads of confusions, inconsistencies, and in addition loads of claims of greenwashing. So, the SEC guidelines are actually supposed to deal with these issues, most notably by, one, mandating that every one public corporations report their complete emissions, after which second, defining normal metrics for them to take action. I believe it is necessary to notice that it isn’t setting particular targets or any form of fines for sure thresholds. That is actually nearly transparency. The principles have been aimed to take impact as early as March, so they have been shifting round fairly a bit. There’s nonetheless some limbo on it, and as of proper now, it might doubtlessly kick in April and even later. There’s simply ongoing overview of among the public commentary to the preliminary SEC tips that they printed, and there is some authorized challenges, which have additionally been holding it up from having a definitive date. And my firm Ivalua, we offer a cloud-based platform that helps companies handle their spend and their suppliers, helps with a variety of goals from bettering provide resilience, profitability, and compliance by bettering visibility into and collaboration with the provision chain. However relating to ESG, and carbon emissions particularly, we’ve got an environmental influence middle. It helps corporations establish precisely what they purchase, pulling third-party data comparable to carbon emission components, to allow them to baseline the place they’re right now, set targets, after which work with suppliers to really decrease them over time.

Victoria Kickham, Senior Editor, DC Velocity  03:47

Nice, thanks. Are you able to present some, possibly somewhat little bit of specifics about the way it will have an effect on you recognize, corporations up and down the provision chain, our listeners and readers? And I consider it form of will get into the so-called Scope three emissions, these come into play right here. Are you able to speak somewhat bit about these as effectively?

Alex Saric, Chief Advertising Officer, Ivalua  04:06

Yeah, completely. And it is necessary to grasp that that is really going to have an effect on companies of all measurement[s, not just public companies, and to do that, to really understand how, it really comes down to three types of business emissions — the categories that are involved in the SEC rule. There’s a Scope 1 emissions, and that’s what a company produces directly through its own operations, and there’s Scope 2, which are what a company causes indirectly, through the energy that it purchases. The first and second can be handled by the companies themselves, but where it gets tricky is the Scope 3, and while the rules officially only apply to public companies, Scope 3 emissions include emissions from the full depth of the supply chain, everywhere from resource extraction to production and transport, and for the average business Scope 3 actually reflects over 70% or so of their emission, so any serious assessment with business has to include the supply chain. Before business can be able to report a Scope 3 emissions, it has to require suppliers to provide details of their own operations and out of their own supply chain, regardless of their supplier size. So, in effect, that means that businesses of any size are going to have to assess and report on emissions to some extent. 

Victoria Kickham, Senior Editor, DC Velocity  05:16

So this is designed, it sounds like, to help people, obviously, you know, or give some guidance in terms of how to do this. What are some of the most important aspects of sort of tracking, measuring, and managing this information, and who should be doing it in a company?

Alex Saric, Chief Marketing Officer, Ivalua  05:31

So, there are a few key elements, and it really starts with, first, just knowing who all the businesses suppliers are — which sounds really basic, but the reality is, most public companies don’t actually know who all their suppliers are or everything that they purchase. So, they first have to get control of that. Then they need to have visibility into the sub-tier, so who their suppliers are dependent on to provide them the goods and services that they’re purchasing. That’s the real foundation. And then you get into the crux of it, which is needing to assess emissions at the category and the supplier and the product level, so you can report on it, you can identify the high-emitting categories and suppliers; develop and execute on collaborative savings plans, carbon savings plans, with those suppliers; and drive more sustainable buying behavior, with things like low-carbon options added to catalogs. And as far as who really needs to drive this. procurement really plays a critical role in executing, because it’s really the function that’s the linchpin to the suppliers. So they’re absolutely essential in a successful effort.

Victoria Kickham, Senior Editor, DC Velocity  06:32

Can it be tracked in management in an ERP system or similar? So, if you’re a company, you’re a supplier, you’re going to be asked for this kind of information. How do you kind of get a handle on that?

Alex Saric, Chief Marketing Officer, Ivalua  06:43

So, it’s not really something that the ERP systems can service. You know, they really work as the critical kind of financial, and in some cases, like for manufacturers and planning systems, but they’re inherently inward-focus, internal-focus systems, so they don’t really suffice for this kind of reporting that really needs to look outside the organization. And that’s why you see companies are relying on specialists and spend supplier-management platforms like Ivalua can do this. These type of platforms serve as the supplier backbone for an organization like ERPs do for their financials. So, they manage all the reporting and engagement with suppliers, which is what’s really needed to assess, monitor, and reduce carbon emissions.

Victoria Kickham, Senior Editor, DC Velocity  07:25

So, proposals like this are often controversial, and I think that’s been the case here, with the limited research I’ve done on this. What has the industry reaction been thus far, you know, from, from your perspective, and in dealing with it with your clients?

Alex Saric, Chief Marketing Officer, Ivalua  07:39

Yes, well, so far, what we’ve seen is a generally positive reaction, with a couple of key areas of concern. I think it’s positive in that, you know, finally providing some consistency in the metrics to be used, which have really been all over the place, and that creates a lot of frustration for companies as well as people trying to assess them. And there’s general agreement that reporting on Scope 1 and 2 are both valuable and achievable. The concern is really focused around the Scope 3 issues, because it’s not fully been in the company’s control. I mean, very few organizations really have transparency into every one that they buy from, like I mentioned, and they’re going to require input from their suppliers that are not themselves obligated to report emissions, and may not be that savvy at doing so. So, effectively, businesses are going to be held liable for reporting that they can’t fully control. And in particular, there’s been pushback on one of the stipulations here, which is the need to report on any source of emissions totaling 1% or more of the total. That’s a real concern, and a lot of the criticism is that that’s too low a threshold, and there’s also been some criticism about not having enough time to adapt, and the processes and systems to comply, and they’re asking for more time.

Victoria Kickham, Senior Editor, DC Velocity  08:49

Do you think this change will help improve efforts by supply chain companies — I’m talking across the supply chain — to reduce carbon emissions and really become better stewards of the environment? It sounds like it’s a step in that direction, but I’m just wondering if you think, if it goes through as planned, is that where you hope it ends up?

Alex Saric, Chief Marketing Officer, Ivalua  09:07

I do. I think it’s definitely moving — what it will do is, it’s going to move carbon emissions reporting from really a nice-to-have to a must-have for organizations, and that’s automatically going to move up the board-level list of priorities. And that’s going to help drive investment in the right systems, the talent, and the processes to make it happen. So ultimately, I think it’ll be beneficial. Hopefully, they can come up with something that’s achievable and palatable.

Victoria Kickham, Senior Editor, DC Velocity  09:32

Alex, thank you so much for being with us today. We really appreciate your insight on this topic.

Alex Saric, Chief Marketing Officer, Ivalua  09:38

No problem. It’s great to be on as always.

Victoria Kickham, Senior Editor, DC Velocity  09:40

Thank you. We’ve been talking with Alex Saric of Ivalua. Back to you, Dave.

David Maloney, Editorial Director, DC Velocity  09:46

Thank you, Alex and Victoria. Now let’s take a look at some of the other supply chain news from the week. And Ben, you reported this week on efforts by the Postal Service to rein in fraud. Can you share the details?

Ben Ames, Senior News Editor, DC Velocity  09:59

Yeah, glad to. Really, anyone who uses the Postal Service is familiar with what happens when you make a mistake on the address or maybe the amount of postage, the stamps you put on a box. You know, the service just marks it “Return to sender” and brings it back, and, you know, we’ve all made that mistake, I think. You know, maybe you didn’t realize a friend had moved or you put a postcard stamp on a letter or something like that. But this week, we learned that the USPS is struggling with a related kind of challenge, but it’s a surge in the use of counterfeit postage. So, that’s been rising in recent years, apparently, and the post office now says that it’s planning to fight back. It says fake postage is an intentional effort to defraud the Postal Service of the funds that it needs to provide services to the public. So that makes sense, because you know, they didn’t pay for this parcel to be carried and delivered. USPS is a government agency, of course, so yesterday, it filed a notice in the Federal Register about this change. What it said is that when USPS finds an item with fake postage, it will not deliver it to the address or return it to the sender, but rather it’ll treat it as abandoned. And what that means is that the package might be — it can be opened and disposed of at the Postal Service’s discretion.

David Maloney, Editorial Director, DC Velocity  11:20

That’s interesting, and, of course, in this e-commerce age, we all receive a lot of parcels in the mail. So, what does this mean for the customers who are expecting a delivery, maybe by an commerce company that they bought something from?

Ben Ames, Senior News Editor, DC Velocity  11:34

Great question. That’s what came to mind. The Postal Service says — they dressed that specifically, and they said that consumers would simply lose any online items that they had purchased that were falsely mailed. And that they would have to, quote, seek recourse from the vendor. So that means they’ll have to call up the person who sold it to them and complain to to the vendor there. The Postal Service did not share statistics on how many packages and parcels we’re talking about here, but in its filing with the Federal Register, it said that the use of counterfeit postage has increased substantially, and that was especially on packages. So, this is more about, you know, parcels than letters. [The Post Office] stated that usually, one of many challenges right here is that these packing containers with pretend postage,don’t even have a sound return tackle. They’re both purposefully inaccurate, or possibly it is a return tackle that is not associated to the true mailer, so that they could not return it anyway. However lastly, they stated the service, what they’re proposing to do to make the change can be starting on April 1, in order that’s, you recognize, solely six weeks away or one thing right here. So, hold your eyes on on these packages. If they do not arrive. It will not be an April Idiot’s joke. It seems like this may very well be the brand new coverage.

David Maloney, Editorial Director, DC Velocity  12:52

Yeah, it definitely does appear that approach, and I assume it simply emphasizes the necessity to have monitoring data obtainable on packages so you possibly can find the place, what occurred to it and return to the supply if needed.

Ben Ames, Senior Information Editor, DC Velocity  13:04

Precisely. That’d be good recommendation.

David Maloney, Editorial Director, DC Velocity  13:06

Thanks, Ben. 

Ben Ames, Senior Information Editor, DC Velocity  13:07

Glad to.

David Maloney, Editorial Director, DC Velocity  13:08

And Victoria, you wrote this week in regards to the rising demand for industrial racking. What are the outlooks for the marketplace for the subsequent few years?

Victoria Kickham, Senior Editor, DC Velocity  13:17

Yeah, Dave, that is proper. So, though logistics trade development is ready to average this 12 months, experiences present that demand for industrial storage racks will stay on the upswing over the subsequent few years. The marketplace for industrial racking programs is ready to develop from $11 billion final 12 months to 16 billion by 2029, a roughly 6% compound annual development fee, and that is based on market analysis from an organization known as Fortune Enterprise Insights. They really launched that knowledge final 12 months — late final 12 months. World demand for warehouse house has been driving the development, and that is particularly prevalent right here in the US, the place accelerating e-commerce exercise has spurred the necessity for extra fashionable warehouses and distribution facilities.

David Maloney, Editorial Director, DC Velocity  14:00

“Fashionable” appears to be a key phrase there. How does that determine into demand for storage racks?

Victoria Kickham, Senior Editor, DC Velocity  14:06

Yeah, that is proper. Effectively, it displays the transfer towards extra fashionable services that incorporate robotics and automation particularly. The report cites expertise advances and demand for automated warehouses as key drivers of business rack development. If you consider it, new challenge implementations lately typically require racking for automated storage and retrieval programs, as one instance, and there is additionally demand for storage rack programs that may combine with different forms of robotic options. I am really engaged on a narrative for this about this for upcoming subject of DC Velocity, and I have been talking with rack producers and others about demand for extra versatile rack options that combine seamlessly with right now’s automated warehouses. That is the case in all industries, however the story will have a look at some examples from the pharmaceutical and healthcare markets. That story will seem in our April subject, so readers on this matter can verify that out. Within the spring. 

David Maloney, Editorial Director, DC Velocity  15:01

That sounds good, Victoria. Thanks.

Victoria Kickham, Senior Editor, DC Velocity  15:03

You are welcome.

David Maloney, Editorial Director, DC Velocity  15:05

We encourage listeners to go to DCVelocity.com for extra on these and different provide chain tales. And in addition try the podcast Notes part for some direct hyperlinks on the matters that we mentioned right now.

And once more, our due to Alex Saric of Ivalua for being our visitor right now. We welcome your feedback on this matter and our different tales. You possibly can e-mail us at podcast@dcvelocity.com.

We additionally encourage you to subscribe to Logistics Issues at your favourite podcast platform. Our new episodes are uploaded every Friday.

Talking of subscribing, try our sister podcast collection. It is known as Provide Chain within the Quick Lane. It is obtainable wherever you get your podcasts.

And a reminder that Logistics Issues is sponsored by TGW. TGW is a number one world programs integrator for automated warehouse options. They are a one-stop supplier, designing, manufacturing, implementing, and sustaining end-to-end success options for URBN, Hole, Jasco, TVH, and extra. Study extra about the best way to enhance your provide chain operations by visiting TGW at ProMat this March in Sales space #S1503.

We’ll be again once more subsequent week with one other version of Logistics Issues. You’ll want to be part of us. Till then, have an excellent week.

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