Latest / The Retail Podcast / Sustainability and Retail Supply Chains

Transcript

Sustainability and Retail Supply Chains · The Retail Podcast

0:09
Hello and welcome back to the Retail Podcast.
0:12
I'm joined by Senior Vice President Eric Linksweiler from
0:16
Trade Beyond. I think we're set up for an
0:19
interesting conversation just by the a snapshot that Eric gave me
0:23
what what's occupying his time right now?
0:26
But Eric, for those who don't know who you are or what trade
0:30
beyond are above, sorry about, if you could just give us an
0:33
overview that would be phenomenal.
0:35
Yeah, fantastic. Hey, Alex, thanks so much and
0:37
really appreciate the channel and the opportunity to to chat
0:41
with you today and tell the folks, you know kind of what we
0:43
do here at Trade Beyond. So we are a global organisation
0:47
and I manage the team around the globe, from North America to
0:53
Europe to our headquarters in Hong Kong and throughout Greater
0:57
Asia. We're in the business of helping
1:00
Tier 1 retailers and brands to streamline their processes,
1:05
manage their extended retail supply chain as it pertains to
1:09
private label product development, sourcing, costing,
1:13
compliance, quality to the container.
1:18
Our customers enjoy our platform in that it, you know, reduces
1:23
time to market, creates efficiencies and allows them to
1:28
have greater visibility in their overall day-to-day operations.
1:32
Wow, that's a, a pretty impressive list of activities.
1:38
You, you obviously must spend a lot of time I #1 travelling the
1:42
world and #2 meeting executives at these Tier 1 retailers.
1:47
Given the diverse sets of operational environments across
1:52
the world, what's keeping people awake right now?
1:55
What's what's the number one thing people want to talk to you
1:58
about when when you're meeting execs?
2:01
Well, yeah, in in our world we have gone, we've gone into a
2:08
time of high regulation through legislation.
2:13
As it relates to the retail supply chain in particular, the
2:17
execs that I speak with, you know, around global sourcing,
2:23
supply chain management, around governance, finance and
2:27
compliance are deeply concerned about making sure that they are
2:32
doing the right things to not impede the delivery of their
2:37
shipments of direct import. And to do that they are they are
2:43
grappling with how to create digital chain chains of custody
2:49
to document the flow of their merchandise from early stage raw
2:53
material development through finished goods.
2:55
This is a topic that we talked about every single day.
2:59
Of course, the cost of shipping of cost of moving goods is top
3:04
of mind, creating new opportunities for source,
3:09
exploring opportunities to move into new geographies.
3:13
And what that does to the business is the infrastructure
3:16
available. Are the people trained up and
3:19
able to to enter into a new market or a new geography to
3:24
help bolster their sourcing strength.
3:27
You know, that's a lot. Those are four or five topics
3:30
jammed in there, but those are the kind of things we hear about
3:32
everyday. What's?
3:35
In terms of if, if you were going to break that down in in
3:38
into the various categories of, you know, stuff that's going to
3:42
impact the product arriving, stuff that's going to impact the
3:46
product being produced and the whole traceability.
3:49
And then you've got sort of sustainability that sort of
3:52
covers all the areas. I mean, sustainability is a
3:58
really interesting one, especially like.
4:00
The. In a cost of living crisis when
4:03
consumers were given the choice, do you want cheaper products or
4:07
do you want more sustainable products?
4:09
I think there's a very sort of mixed response there.
4:12
I'm just curious how retailers see that problem because is, is
4:17
the legislation, especially in Europe going towards more
4:20
regulation and more sustainable like, you know, understanding
4:24
where your raw materials coming from having product passports
4:27
for, for products. Yeah.
4:30
What's your view? Yeah.
4:32
You know, Alex, I've, I've, I talked about this with others,
4:35
others in, you know, that sit in chairs like yours as well as,
4:39
you know, our clients and, and, and, and and other folks in the
4:44
ecosystem that I work with. And the way I see it.
4:48
And you maybe I'm, maybe I'm a bit of an optimist, but you
4:53
know, this whole topic of sustainability, it's not new,
4:58
OK? It's been, you know, we've been
5:00
talking about this for a while and some of the better companies
5:05
are actually say the leading companies, not better leading
5:09
have been, you know, exploring opportunities of becoming a more
5:15
responsible sourcing organisation, a more sustainable
5:19
organisation as it comes to material consumption, waste,
5:23
circularity, et cetera. So those conversations have been
5:26
going on. What's new is that folks are now
5:30
forced to do something about it, right?
5:33
What becomes law becomes, you know, and what becomes
5:36
measurable, you know, now becomes action.
5:40
And, and, and, and I, I see that as a good thing, frankly.
5:45
And it's just, it's, it's taking the leaders and it's putting
5:49
their thoughts into actions and it's helping what I see that
5:51
from an optimistic perspective is the leaders are dragging some
5:56
of the laggards into the conversation and into the action
5:59
plan with them. You know, I see, you know, we
6:02
operate in a, in a global shareable world, the global
6:06
shareable economy, a global, I mean, gosh, we share, you know,
6:10
we share rides with each other. We, you know, we, we share, we
6:14
share seating at the table and at restaurants together.
6:17
And, and everything is becoming more, more community driven.
6:22
I see this, you know, I see this particularly in the apparel
6:25
space. You know, the leaders in the
6:26
apparel space in particular are helping each other to partner
6:31
with their common supply chain suppliers and, and developers
6:38
and, and mutually helping each other to realise goals and
6:42
targets around sustainability. So I think I, I, I think the
6:47
future is, is challenging, but bright.
6:50
I think the road to brightness is going to be bumpy, but I
6:53
think the future is bright. Do you find?
6:57
How do you manage, you know the different cultures specifically
7:01
in Europe or in Asia where you know it is higher on on the menu
7:07
compared to North America or the United States?
7:10
It is sustainability from your experience as much of A issue in
7:16
in the US or not? Well, I don't know.
7:19
It's a question rather than a statement.
7:21
Yeah, Yeah. I believe we're, I believe in
7:26
the in the US and North America in general.
7:29
We're certainly catching up, catching up to Europe, Europe,
7:32
Europe seems to act faster and with more depth and more
7:36
diligence around these topics than we do in North America for
7:41
sure. But the North American consumer
7:44
is, is driving the market. It's driving the turn as well,
7:50
as well as the, as, as well as the legislation.
7:54
And, and I, I, I, I believe we're seeing, you know,
7:58
certainly a, closer to the middle, a closer to the evening
8:03
or the levelling, I should say, of all regions around this
8:07
topic. And, and do you see in terms of
8:11
the category of product or retailer gross, I mean, I
8:16
remember reading a fantastic transparency in supply chain use
8:22
case for I think it was LVMH. So you know, 3-4 years ago they
8:26
wanted to on one line of products bring that traceability
8:29
to life. Do you see a certain category
8:34
having more focus on by retailers or are they all?
8:36
It's across all categories right now.
8:39
I believe, which is not uncommon in our business, certainly
8:43
around digitalization, that apparel, footwear, wearable
8:47
apparel, footwear and accessories are leading the
8:49
charge. You know, I, I remember I'm 100%
8:52
retail. So I'm, I'm a bit biassed, but I
8:57
and I work across all product assortment or merchandise mix
9:02
retailers, hypermarkets, DIY specialty, this department
9:07
store, you name it. But, but clearly with the amount
9:11
of consumption that we see in apparel, you know, obviously
9:16
food out out stripes it of course, but with count of
9:20
consumption as it relates to material usage, apparel,
9:27
footwear, outrace, everybody at this point, at this point that's
9:31
where the majority, that's where the movers are.
9:34
Yeah, well, and what are the sort of quick wins retailers can
9:38
do in this space apart from obviously picking up the phone
9:41
and speaking to you guys? But what what's like when they,
9:43
when they come to you again and you're having these
9:46
conversations, they how how are they, you know, what's the
9:51
outcome that ultimately they're there trying to get to that you,
9:55
you will help them with or the the the major one that you're
9:59
you focus on. Yeah, what I try to do is strip
10:02
people down to the basics. You know, most, most folks come
10:06
to us with a very long wish list and they want it all and they
10:13
want it all tomorrow. They don't have the foundation
10:16
in place. They don't have the building
10:18
blocks in place. The building blocks of your
10:20
supply chain is just that. Your supply chain partners, your
10:25
ecosystem, your supply chain community.
10:29
And in in what we do is we emphasise the importance of
10:35
identifying to the 3rd, 4th and 5th tier every member of your
10:41
supply chain and actually getting it into a visualisation
10:46
map that allows you to see the inter and intra dependencies of
10:52
all those members. And then begin your segmentation
10:56
of that map into certain certain like types, certain certain
11:02
performers and non performers, certain folks that can impact
11:07
your goals in certain areas at a significant level.
11:11
So where is my biggest opportunity for scope free
11:14
reduction if I have a supply chain made-up of 15 to 2000
11:19
active supply chain partners? It's not in all of them, but
11:22
until I get them all mapped and can backwards to the top 100, I
11:27
don't really know where to start.
11:29
So gaining visibility into your true supply chain community and
11:36
that community of partnerships is job one.
11:39
And it's very low hanging fruit, by the way, it is a place where
11:44
we can to your point, Alex, you asked where's the quick win?
11:47
I mean, it's a, it's, it is a quick win.
11:50
It seems elementary, but you'd be shocked at how many folks are
11:54
trying to do this manually on paper in Excel and just can't
12:00
keep up with it, right. And and so these are the tools
12:03
we bring the market that we help, you know, we help make
12:06
that. I won't say make it more simple.
12:09
I don't like that word because everything is work, but make it
12:14
possible. And that, that's where I like to
12:17
emphasise. Do you has anyone's?
12:20
Oh, again, because I, I'm definitely not a supply chain
12:23
expert, but in terms of the single modality of a lot of
12:28
supply chains not having redundancy built into Geo
12:31
geographies where there may be tension somewhere in the middle.
12:36
And you know, therefore they have to then diversify to
12:39
another region or country. Again.
12:41
Is that is that something people are like going to bimodal supply
12:45
chain models in terms of, you know, I've got something in Asia
12:49
or China and I need to get something in, in, I don't know,
12:52
Brazil or something in case something happens.
12:55
Is that is that the level of depth people are thinking about
12:58
or is that just very like they're?
13:01
No, no, they, they, they are absolutely at that level of
13:04
depth of thinking and a conversation and of modelling
13:08
and of seeking outside counsel and outside support and outside
13:13
advisorship on how to make that happen.
13:16
That being said, I don't see a tonne of execution from that
13:21
perspective, you know, from using your words, you know, by
13:24
bimodal. Now what I do see that is being
13:29
executed is the elimination, you know, of redundancy on maybe on
13:37
a, on a single modal perspective as an example.
13:40
And from a systems management perspective, you know, I do see
13:45
of most organisations moving forward with digital
13:50
transformation projects to get their entire organisation on a
13:55
single backbone whereby they can be communicating more
13:59
effectively. Everybody's hearing the same,
14:01
everybody's on the same channel, everybody's getting the same
14:03
message, everybody's understanding exactly where they
14:06
are in time and motion and in critical path and in milestone
14:10
because they're all on a single sheet.
14:12
That has happened. That is, that's what we do and
14:15
that is absolutely happening in the biggest organisations in the
14:18
world. Go ahead.
14:21
How, how does that compare? So where, where does it again,
14:25
theoretically, I read a lot about, you know, how retailers
14:29
are optimising their supply chains to finish at the
14:33
customer, not at the point of entry at some port in country.
14:39
And again, I, I haven't because people don't really talk about
14:42
this trans, this sort of transparency.
14:45
How much of that do you see from your experience in terms of have
14:49
you seen good examples of supply chains finishing with the
14:53
customer as in you know end to end visibility on that?
15:01
You know what's interesting about that is you do hear a lot
15:03
of people talking about it and what I the success stories I see
15:07
are with the smaller organisations that are do a
15:09
better job figuring they do a better job figuring out the last
15:13
mile than the large organisations.
15:15
You know if you are $150 billion top line, $50 billion US top
15:20
line retailer, yeah, the volumes you are working with make it
15:30
challenging to have the supply chain end at the consumer,
15:35
right, At least, you know, at least from finished good to
15:40
delivery. So we don't see this much there,
15:43
but in the mid tier, in the mid tier, we're seeing more and more
15:47
of that and they're getting better at it.
15:50
I mean, I was in Shanghai in couple of weeks, 3 weeks ago
15:55
doing a, a bit of a recce safari with some retailers and I was
16:00
really impressed with their sort of sustainability, how they're
16:04
trying to drive sustainability through their different supply
16:08
chains and operations. But again, it's a big, you know,
16:12
there's a big diversity in terms of people who, who are nailing
16:15
it and people who, who are, are still, you know, doing things
16:19
the, the old way you mentioned earlier in terms of the quick
16:22
wins. What's the one thing that's
16:24
surprised you when you, when you speak to retailers?
16:28
Is there any themes that like you're like, oh, things that you
16:32
thought people had already done or doing and they're not doing?
16:35
Is there anything that's really surprised you when you're having
16:38
these conversations that you can share?
16:42
Well, I'll tell you, you know, it's I, I take it back to that,
16:46
to the dinner conversation. You know, you go to dinner with
16:49
your wife and you sit down, you're having dinner with a
16:51
couple you you don't really know very well.
16:53
Maybe it's her girlfriend and her meeting the husband for the
16:56
first time, right? Yeah.
16:58
And you get into the conversation.
16:59
So what do you do? You know, and I start to
17:01
explain, well, I help retailers that are developing private
17:04
label and this and that and, and, and then they kind of drill
17:08
in a little bit and they go, well, gosh, you know, if
17:11
they're, if they're already creating, you know, if 50% of
17:14
their assortment is already private label and they're
17:16
managing all that on their own, I mean, it seems like they've
17:19
got it pretty figured out. What else can you possibly do?
17:21
And I said we need be surprised. You'd be surprised to walk into
17:25
$100 billion retailer and see how much they do on sticky
17:29
notes, on e-mail, on WeChat. And this hand's not talking to
17:35
the other hand. And yet they're managing this
17:37
massive business. I mean, and yet they're doing it
17:42
from a state of pencil and pad. That's the biggest thing that I
17:46
see. And, and, and then on top of
17:49
that, once you see it, it's the inability for so many
17:53
organisations to make a decision and get started on an
17:58
optimization and a transformation programme.
18:02
They are just, they are just hypnotised and paralysed in, in
18:07
their ability to move forward quickly.
18:09
That's the biggest surprise I see.
18:12
It's, it's, it's a bit frustrating to me actually,
18:15
because I see so much opportunity and so many dragging
18:18
and so many dragging feet. And every year you'll get the,
18:22
you know, you'll get the Gartner report and here's what we're
18:24
going to do. And here's how much money we're
18:25
going to spend. And here's the projects that
18:27
were, you know, that are top of mind.
18:29
And these are the things that we're budgeting for.
18:31
And, you know, the numbers at the beginning of the year never
18:33
seem to match up to the numbers at the end of the year.
18:37
Yeah. I mean, look, I the, the allure
18:39
of private label is you know, from a, a return on investment
18:43
is fantastic. And that's why, why I understand
18:46
it coming towards the end of, of our, of our chat, 2 sort of
18:50
areas that I'd like to focus on and, and I'll let you decide in
18:53
which way you'd like to answer them.
18:56
Circular and sustainability and how practical ways you can help
19:03
retailers or what retailers should be thinking about is, is
19:07
one question around, specifically around circular and
19:11
sustainability. And then the second one, when
19:14
you look to the future and you look at, you know, OK, not
19:18
looking into the looking glass, but what you think is going to
19:22
be on people's agendas going forward, Is it going to be more
19:25
regulation? Are there other things that you,
19:28
you see on the horizon? Yeah, 2 questions.
19:33
Yeah, both of them pretty busy. You know, the circularity
19:37
conversation is an interesting one and you know, certainly one
19:41
that I, I embrace. I'm not an expert in
19:44
circularity, but we're getting more and more into these
19:46
conversations 11 place where people are using the tools that
19:52
trade beyond to assist them here and other tools, not just sorry,
19:56
of course we're getting we're we're beginning to do a better
20:01
job incorporating the. The end life of a product and
20:07
the voice of the customer utilising the product playing
20:12
back into the early stage development of the next
20:16
generation of a collection or of a product.
20:19
So, So what do I mean by that? So if you are a, you know, if
20:23
you're let's stick with apparel, I mentioned that earlier, you
20:26
know, if you're an apparel or retailer and you're, and you're,
20:29
you're creating a, a new material, let's say a new
20:33
material blend that hasn't been in market before, proprietary
20:36
material blend and you're, you're, you're building that now
20:40
it's taking you 18 months to get it to a role and now we're in
20:43
production and we're producing product and that product,
20:46
product is in the market. In the past when that product
20:50
has been returned for a quality issue, a performance issue,
20:54
etcetera, we never get that information back to the front,
20:58
back to the early stage product development cycle so that we can
21:03
improve upon it. We just sort of forget about it.
21:05
We throw it away and we leave it.
21:07
We leave it to the past and we just start working on a new
21:09
product. We're seeing a much better job
21:11
now, new tools available. AI is helping out a little bit
21:15
here. You know, we're able to deliver
21:18
and anticipate some of the reaction from the market and
21:21
we're pushing that reaction into the early stages of product
21:25
development for the next generation of goods that that's
21:30
happening, that's happening. It's slow, it's got a ways, it's
21:33
got a ways to go. But, but that's what I would
21:36
say, you know, about circularity, I'm very bullish on
21:38
it. I, I really believe, you know,
21:40
again, it's my optimistic side. I really believe as a, as a
21:43
human race in general, you don't, you only hear the bad
21:45
news, you don't hear a lot of the good.
21:47
But we're beginning as a global society to understand the
21:52
importance of that and understand the importance of
21:55
taking care of things longer term.
21:57
As for the future, I do believe that we are going to see more
22:03
people jumping on the artificial intelligence machine learning AI
22:08
bandwagon. Right now the use cases
22:12
impracticality frankly are limited in our in our business,
22:17
in our world, particularly around the area supply chain.
22:21
But we're working hard at it. Other folks in our business are
22:25
working hard at it and we're beginning to at least get a
22:29
vision towards, you know, what does 12 months outlook like for
22:34
tools that we can deliver to our customers that would be
22:38
meaningful and help them. Automating the onboarding, the
22:42
vetting and the actual activation of new source, new
22:47
sourcing agents, new sourcing the supply chain partners is, is
22:52
a key. Being able to anticipate the
22:55
performance of a particular product in market in different
22:59
climate, in different use patterns, that's coming and it's
23:03
helping our designers that are on our platform in the early
23:06
stage. Being able to do cost
23:09
optimization using AI is something on the sourcing side
23:15
of the business that we're that we're seeing start to bubble up
23:17
to the top that you really can't do with a lot of manual
23:22
actually. I mean, you can, but you know,
23:23
obviously we, we speed up, we speed up the process with AI,
23:26
the whole, the whole topic of traceability, traceability of
23:30
labour, traceability of slave labour, of, of illegal underage,
23:36
socially challenged labour. This is a huge opportunity for
23:42
AI, one that we've already employed and we do have an
23:45
action. So I think that's where the
23:48
future is. Lots of opportunity there that
23:50
we're not there yet. People want to rush it.
23:53
People are trying to rush it. It's not there, but the
23:56
practical use cases are starting to come out.
24:00
That's fantastic. Thank you.
24:01
Eric, a side note, will you be at any of the conferences in the
24:06
final sort of quarter of the year you is trade beyond
24:10
expoing? We, we do, we, we actually find
24:14
a lot of opportunity in some of the smaller or some of the non
24:17
profit events. We do a lot of work, for example
24:20
with the American Apparel Footwear Association.
24:24
A A Of course, we attend some of the larger retail events.
24:30
NRF, right? I think you guys had a big
24:32
presence at NRF this. Year certainly NRF on an annual
24:36
basis in New York shop Hawk these larger events we do you
24:41
know one of our most successful events not to plug but we have
24:45
we have an event that we run in Hawk in Hong Kong every November
24:49
called Global Sourcing Day. Oh, we sponsor and produce this
24:54
event ourselves 100% full full full day.
24:59
And you know we're in the heart we're in the heart of global
25:03
sourcing for Consumer Packaged Goods and products and
25:06
merchandise there in in Hong Kong.
25:08
And so we have leaders, managing directors, supply chain leaders
25:14
from all over greater greater Asia and and several from Europe
25:18
actually that come in for that, that day.
25:20
So people can see that on our website actually.
25:23
What's the, what's the outcome of the event?
25:25
So is it, are you, is it like people talking about various
25:30
elements of supply chain? Is it?
25:32
Is it some workshops or bit of everything?
25:36
Yeah, yeah. It's we primarily bring in
25:40
experts in the space of supply chain, supply chain
25:43
optimization. We bring in efforts in the
25:46
around topics of environmental, social, governance and
25:51
compliance. We bring in logistics experts,
25:55
run panels, offline workshops as well, and of course give folks
26:01
exposure to a lot of a lot of digital tools and platforms that
26:06
we either connect to or that we develop ourselves.
26:09
That's fantastic. What's the event called?
26:11
Sorry. Yeah, Global Sourcing Day.
26:15
Global Sourcing, I was just going to I'll put, I'll put the
26:19
I'll put the link in the show notes.
26:21
Eric, thank you so much for giving up your morning.
26:24
It was really great pleasure and hopefully maybe see you at NRF
26:27
in January. All right.
26:29
Fantastic, Alex. Look forward to it.
26:31
Thanks for the opportunity.