Intro/Outro (00:03):
Welcome to Supply Chain Now, the voice of global supply chain. Supply Chain Now focuses on the best in the business for our worldwide audience, the people, the technologies, the best practices, and today’s critical issues, the challenges and opportunities. Stay tuned to hear from those making global business happen right here on Supply Chain Now.
Scott Luton (00:31):
Hey. Hey. Good morning, good afternoon, good evening, wherever you are. Scott Luton and Greg White here with you on Supply Chain Now. Welcome to today’s show. Gregory, how are we doing today?
Greg White (00:41):
Very well, Scott. I see that you got a little sun this weekend. Tell us about it.
Scott Luton (00:47):
Understatement of the year. Amanda and I took off for a quick weekend trip to Key West, and we had a delightful time.
Greg White (00:56):
Awesome.
Scott Luton (00:56):
Yeah. We drove around way too much in a convertible. As you can see, my sunglasses did a good job, but I needed a little more suntan lotion maybe.
Greg White (01:06):
And did you ride scooters there? I know that’s a big tradition on Key West. Or did you just have to dodge them in the street?
Scott Luton (01:13):
We dodged scooters, go-karts, golf carts, you name it, but had a blast doing it.
Greg White (01:19):
Awesome.
Scott Luton (01:19):
And speaking of having a blast though, we’re back here every Monday, 12:00 noon Eastern Time, Greg, for The Supply Chain Buzz. Right?
Greg White (01:28):
So much better than being at the beach.
Scott Luton (01:30):
No kidding, man. And we’re going to be covering some of the leading stories you got to have on your radar across global supply chain and global business. And, Greg, we’ve got a wonderful guest joining us here about 12:25, don’t we?
Greg White (01:42):
Yes, we do. And I’m not going to announce his or her name.
Scott Luton (01:48):
I’m going to beat you to the punch. I’m going to beat you to the punch. I’m going to say we have Leah Knight with SAP. She’s going to be joining us about 12:25 p.m. Eastern Time. We’re going to be talking, in particular about many things, especially the automotive industry when she joins us. So, stay tuned for that. And we want to hear from you too, Greg, right?
Greg White (02:06):
A knowledgeable and seasoned practitioner. So, someone that I think everyone can relate to. I mean, she has been doing it – well, we’ll let her tell you how long. But she is not what I would call a supply chain enthusiast. She’s a supply chain biker.
Scott Luton (02:26):
The real deal. Holy field.
Greg White (02:27):
Real expert. Yeah. Right.
Scott Luton (02:29):
Well, looking forward to Leah joining us here in about 23 minutes, but who’s counting. But, folks, again, you’re going to hear from Greg and get some of his expertise and analysis. We’re going to walk through the headlines. But we also want to hear from you, so use that chat toolbar and let us know what you think of the conversations we have.
Scott Luton (02:47):
Speaking of which, Greg, I’m going to say hello to a few folks, and then we’re going to share a couple programming items. Of course, Amanda and Katherine behind the scenes helping to make production happen here today. “Happy Buzz Day,” Amanda says. Shelly Phillips – great to have you – “Good morning from Colorado.” I bet it’s gorgeous out there this time of year, Greg, you think?
Greg White (03:05):
Well, it depends on the day. You know, yesterday might have been 70 and today it could be 22 and snowing a foot. You know how Colorado is this time of year. Shelly, you got to fill us in. By the way, Shelly had some really interesting introspective dialogue on one of my commentaries – last week? Yeah – last week. So interesting, she’s very insightful, obviously.
Scott Luton (03:29):
Shelly, and we’re also going to have you on the sports show coming soon. So, Shelly, keep up the great work as always. Let’s see here. Hey, my old friend, James Moore, from Tampa is tuned in here today. James, great to see you.
Greg White (03:41):
Hey, James. Let me know what you’re doing Wednesday night. If you’re free, I have a reservation at Bern’s that I’m not going to be able to go to. So, I was just thinking of who could take advantage of that. So, let’s chat.
Scott Luton (03:57):
James, shoot me a note on LinkedIn or should Greg a note. We’ll, make that happens. Great to see you though. Omcar from Mumbai in India via LinkedIn. Great to see you. Looking forward to hearing your perspective on what we’re chatting about here today.
Greg White (04:11):
No reservations in Mumbai. Sorry —
Scott Luton (04:13):
Not this week. Gino is with us from Northern Alabama. Gino, great to see you here today. Let’s see. Mick tuned in from Washington D.C. via LinkedIn. Michael from Boston via LinkedIn. Of course, I mentioned Heavy Hitter Katherine.
Greg White (04:30):
Holding down the fort on YouTube.
Scott Luton (04:31):
That’s right. That’s right. Jules from LinkedIn from the Republic of Congo.
Greg White (04:40):
Democratic Republic of the Congo. The Congo, we westerners call it.
Scott Luton (04:43):
That’s right. Joshua from Sunny California. Well, Joshua, you’ve got something in common with our guest who also finds herself in California. So, hey, welcome to everybody. I know we couldn’t hit everybody, but welcome. We look forward to your perspective as we work through a jam-packed show here on The Supply Chain Buzz. Greg, are you ready to get down to work?
Greg White (05:07):
Yeah. If we got to call it work, yes.
Scott Luton (05:09):
Well, let’s start with some resources. So, folks, it’s always good to have resources. The U.S. Bank Freight Payment Index for Q4 2022 is now available. It’s free. And as you see there, it really focuses on volume and freight volume and freight spend domestically. So, check this out. You can get your copy at freight.usbank.com. It’s just that easy, right, Greg?
Greg White (05:36):
It is. And it’s that useful. And by the way, if we can drop the link into the last assessment of that, which continually reinforces that you should get the Freight Payment Index. But what a great discussion we had with Enrique Alvarez from Venture Global Logistics and Bobby Holland, of course, from U.S. Bank. But that one was particularly good, don’t you think?
Scott Luton (06:01):
That’s right. Oh, no doubt.
Greg White (06:03):
And real, practical, useful perspectives there. And we’ve changed up the format a little bit so that it’s enough about the report, but also about what the heck people are doing with it and what you can do with it.
Scott Luton (06:17):
Great. Greg, that is a great call out. I tried to combine Greg and great there. Great call out, Greg. And let’s see —
Greg White (06:25):
Many people have that challenge.
Scott Luton (06:27):
We just dropped a link to both the index as well as that episode Greg is talking about, because we framed it around five things, five key takeaways from the Freight Payment Index. So, y’all check that out and let us know what you think of the conversation.
Scott Luton (06:43):
Hey, speaking of great resources, Greg, we have one of Leah’s many colleagues, the one and only, Ursula Ringham from SAP joining us, along with Brandi Boatner from IBM on March 21st. Now, this is going to be a very unique webinar. It’s not so much focused on supply chain as it is on creating content that matters, creating content that resonates. So, join us on March 21st at 12:00 noon Eastern Time. Because Greg, everybody’s creating content these days, right?
Greg White (07:13):
Yes.
Scott Luton (07:14):
Some of it better than others, right?
Greg White (07:16):
Yes. That’s right. Some are better at creating content than doing the work. Jake Paul is a great example who got pounded in his boxing match the other day. Some people should stick to YouTube and not to be experts in that which they are enthusiasts.
Scott Luton (07:34):
Right.
Greg White (07:35):
But, yes, Ursula and Brandi, of course, experts. So, learn from the best. Forget about —
Scott Luton (07:45):
March 21st, 12:00 noon Eastern Time with me, and Greg, and Ursula, and Brandi.
Greg White (07:50):
First full day of spring also.
Scott Luton (07:52):
Oh, is it? Okay. Man, great timing. We were just talking about some of the things blooming across the beautiful State of Georgia and California in the pre-show. All right. So, Greg, we’re going to move fast today. We’ve got a lot to get through between now and Leah joining us around 12:25. Are you ready?
Greg White (08:10):
Yes.
Scott Luton (08:11):
So, let’s do this. I want to walk through some headlines first and then we’re going to talk about one of your supply chain summaries. So, I want to start with this read from the Wall Street Journal, retailing giant, Target, is planning on significantly expanding its next day delivery program. The company is investing a $100 million into next day, and it’s going to be opening at least – at least – six more sortation centers across the country by 2026. Target executive stated in the recent earnings call that brick and mortar Target stores were handling, Greg, some 95 percent of online order fulfillment volumes. How about that? And we’re going to drop the link to that read in the chat.
Scott Luton (09:00):
Really quick, as reported by Supply Chain Dive, Dole said last week that the company had been hit with a ransomware attack – join the crowd – causing the company to pause production at food plants in North America, as well as suspending shipments temporarily. Many analysts are reporting that the global food industry has become a bigger, if not the biggest target, for bad actors in recent years. But, folks, as Greg and I have chatted with numerous guests through the years, it’s only going to get worse and worse, more attacks and more complex attacks as well.
Scott Luton (09:32):
And then, finally – Greg, I’ll get your to take on this before we move to your supply chain summary – remember that term from a couple years ago, retail apocalypse? We had shows around the theme, some really interesting shows. Well, the Daily Mail is asking if the U.S. is entering another retail apocalypse as more than 800 retail stores are set to close across the country this year. Now, Bed Bath and Beyond kind of sticks out differently because we know what that’s related to. But Bed Bath and Beyond, Tuesday Morning, Gap, Walmart all set to close stores over 800 locations across the country. So, Greg, before we move into your supply chain summary, you’ve talked and kind of analyzed what’s going on at Bed Bath and Beyond, but whether it’s that or whether it’s what’s going on across retail, your quick comment before we move into one of your popular summaries.
Greg White (10:24):
Yeah. Let me start with no.
Scott Luton (10:29):
I love that.
Greg White (10:30):
The U.S. is not going into a retail apocalypse. So, I want to let that simmer there for a second. Thank you for allowing that to happen, Scott. No, and I’ll tell you why. If you look at companies like J. Jill, by the way, whose stock is up 74 percent since August. Academy Sports, Dick’s Sporting Goods – which is acquiring other businesses like they’re going out of style, some of which may actually be going out of style, but soon to be saved by Dick’s Sporting Goods – and companies like Target who’ve had a strong comeback from a horrible year where they, basically, did a ton of damage to themselves, companies that are capital – it’s funny, Scott, I didn’t know you were going to choose this article first thing this morning because I didn’t read your email when you sent it early this morning when I was thinking about retail and about why so many stocks. There’s a company called The Buckle, Academy Sporting Goods, J. Jill, and others whose stocks are just exploding. And I was thinking why is that.
Greg White (11:34):
And here’s why. They are capital efficient businesses. They’re not over leveraged with debt. They didn’t over invest in inventory. They didn’t get crazy in post-casting and looking at demand from 2021 and think that that would be what demand looked like in 2022. And these other companies are just some of the most – the word poorly, I’m going to say – poorly – it was another four letter word – elite – that I was thinking of – because they are run that bad. Bed Bath and Beyond is one of the worst businesses in America. Likewise, Party City, so poorly run and poorly capitalized. Tuesday Morning is kind of a secondhand store, I don’t know. It’s kind of like the home goods section of a T.J. Maxx or a Ross, which also are exploding, by the way. Their businesses are doing quite well. So, I think these are examples of the exception, not the rule, incredibly poorly run businesses by management teams that should have been fired a long time ago and propped up by these idiot retail investors who bought companies like AMC and Bed Bath and Beyond trying to kill the shorters in the stock market. So, these companies should have run out of capital a long, long time ago in a lot of cases. And they’re getting their comeuppance.
Greg White (13:00):
Now, let me address Walmart, because most of the store closings that they’re having are because they are doing away with their e-commerce only stores, stores that only fulfilled e-commerce. And they’re going more to – to the first story we talked about – stores fulfilling e-commerce from the store, which makes so much sense for a big box type retailer like Target, BestBuy, Walmart, HomeDepot.
Scott Luton (13:30):
Well,that is like a retail quick minute. Thank you for your quick analysis there, Greg.
Greg White (13:37):
How long was that. There’s no way that was just a minute.
Scott Luton (13:40):
Probably two minutes, but hey. So, no, folks, there is no retail apocalypse. And we’d welcome your opinions there on that or some of Greg’s commentary.
Greg White (13:49):
I would call it retail reckoning for those who are capital inefficient. How’s that?
Scott Luton (13:55):
I like that better. I like that much better. All right. So, a couple quick comments, then we’re going to move into Greg White’s supply chain commentary. And then, we’re going to have a special guest in Leah Knight with SAP join us. But really quick, I want to go back. Hey, James. Hey, he’s game. So, he’d love to dine at Bern’s on Wednesday night. James, shoot us a note and we’ll get you connected. Unless Greg was kidding.
Greg White (14:21):
No. greg@supplychainnow.com.
Scott Luton (14:24):
All right. Wonderful. Wonderful. Let’s see here. Shelly, back on Target, she loves Target and she gets in trouble there sometimes. We probably all do at times. Let’s see here. And, also Shelly says, “Retail is like the fable, The Ant and The Grasshopper. This is winter for retail.” That’s a good point. Good point.
Greg White (14:43):
So, also like Game of Thrones.
Scott Luton (14:47):
Ah. Man, that’d be a great —
Greg White (14:49):
Winter is coming.
Scott Luton (14:50):
Yes. Great meme. And then, Mark – hey, Mark. Great to see you. The rebate evangelist does great work over there. So, Mark says, “Please, can everyone send some tomatoes and cucumbers to the UK? We have plenty of toilet roll in our cupboards but no vegetables.” It’s crazy. Have you been reading any of that, Greg, about what’s going on with produce in UK?
Greg White (15:18):
Yeah. Actually, we knew that this was coming some months ago. You know, we realized that South America, where we get those kind of goods from this time of year, and other places south of the equator where their growing seasons are opposite had some devastating happenings in terms of their crops. So, we’ve known this is coming. Move to the U.S., Mark.
Scott Luton (15:46):
Yeah. Come on, Mark.
Greg White (15:47):
I mean, I don’t know why. I mean, they have to get more for their goods in UK because everything is so expensive there. But everybody seems to funnel this stuff to the States because it’s a big humongous consumer market. We will have shortages. We will never have them on the same level that the UK or other European countries.
Scott Luton (16:14):
Yeah. Thank you for that, Greg. And, Mark, again, great work. It was great to collaborate with you and the Enable team last week. All right. So, Greg, before we bring in our guest, we want to talk about the supply chain summary – those were popular – that you wrote last week. And then, we’ve got one quick public service announcement related to an initiative that we’re supporting. So, let’s talk about the Kansas City market, Greg, and what’s going on there?
Greg White (16:41):
Yeah. So, interesting, I commented on an article about Kansas City and Missouri markets. They were talking about Missouri generally, but really it’s mostly Kansas City. And, in fact, it’s not just Kansas City, Missouri. Some of you around the world may not know there are two Kansas cities, Kansas City, Kansas, and Kansas City, Missouri. Please don’t ask me why and never get a discussion with a Chiefs fan about that either. But that whole area, because it is very, very near the geographic center of the contiguous 48 states of the United States, has always been a big hub for distribution. It used to be a family-owned business, multiple families ran it. But now a lot more corporate. And it’s funny because this article talks about all of the industrial real estate changes that have happened since COVID and this huge explosion of industrial and fulfillment distribution type centers. But that was already happening starting in about 2018 in Kansas City, again, because of the pressure to have two day delivery to everywhere.
Greg White (17:45):
So, it made me think that as the market is slowing down in Kansas City, we haven’t seen that throughout the country, but Kansas City seems to be a leading indicator for what’s about to happen across the country. Maybe not on the coasts, but in the other sort of flyover areas of the country where people are trying to place distribution centers for one, two, even same day fulfillment. So, that was just what it made me think of. Kansas City has been very, very good about it and it has really become. The industry of Kansas City is to provide these fulfillment centers. So, keep an eye on that market was the upshot of that article. You can read the commentary. I think somebody dropped it in there. When they say KC commentary, that’s not the Chiefs commentary. So, it didn’t have some Chiefs commentary.
Scott Luton (18:47):
The reigning Super Bowl champions, we should say
Greg White (18:51):
Is that right, Scott? I did not know that. Ask me how I feel, Scott. Ask me how I feel.
Scott Luton (18:57):
How do you feel about that, Greg?
Greg White (18:58):
Like a three-time Super Bowl Champ. But back to the point at hand, and that is – I do believe and I’m not saying I’m right. I just believe I’m right, like all of you – I think that you can keep an eye on this market that is central – literally, central to logistics in the United States, and also very central to some of the trends as regards transportation and warehousing. So, it could be an indicator of things to come. And building and lease uptake has slowed dramatically in that part of the world as we are, of course, more and more able to go back to those retail stores who are not failing.
Scott Luton (19:39):
Yeah. Well, so check it out. One of the best parts about these commentaries – again, you’ll find this on Greg White’s LinkedIn profile or feed Monday, Wednesday, and Friday. And beyond Greg’s brilliance that he shares. I’m not least bit biased – folks, as Greg mentioned, I think Shelly, all the comments on there —
Greg White (20:02):
Yeah. The commentary is so useful.
Scott Luton (20:06):
Yeah. It almost becomes like a Reddit. Informed expert Reddit feed is kind of what that LinkedIn conversation that follows your summary, so love it. Use the link, let us know what you think. Put your comment in there and we’d welcome your perspective. Hey, going back to Super Bowl, Stephen via LinkedIn – Stephen, let us know where you’re tuned in from – he says, “New England was being charitable.” Greg, I’ll —
Greg White (20:33):
Does that mean by keeping their loud mouth quarterback, Mac Jones? Or does that mean by losing so many games so it was so much easier for the rest of the AFC?
Scott Luton (20:41):
Well, Stephen is going to weigh in there. And all this is a good spirited banner. NFL, that creates some of the most passionate discussions.
Greg White (20:53):
I love it. One of my best buddies is a New England fan. And my brother lives in Boston, so he’s become a New England fan. And it is fascinating. It’s all with love.
Scott Luton (21:07):
All with love.
Greg White (21:08):
Mini tiny bit of hate right in the middle of the conversation.
Scott Luton (21:12):
All right. Well, kidding aside, I want to move and share the most recent update here on this wonderful program. So, Greg mentioned Enrique Alvarez with Vector Global Logistics earlier, man, just one of the good folks out there in the industry, always doing big things, helping support a wide variety of nonprofits. This has been running sadly. Sadly, we have to have a need for this. But about a year, Leveraging Logistics for Ukraine, so far this effort led by Vector, a big ecosystem around the world has contributed, together, over 670,000 pounds of humanitarian aid has reached families in need in Ukraine and Poland and elsewhere. Folks, they’re driven by these monthly planning meetings. And the next one is March 7th at 11:00 a.m. Eastern Time. The good thing is you don’t have to give anything. You don’t have to say anything. You can show up and just kind of connect the dots and get a sense of what goes on. And, typically, you leave that session with lots of market intel.
Scott Luton (22:17):
Greg, the last one I attended, I think last month, they had a gentleman there, an American from – I can’t remember where he is from, but they call him Bakhmut Brad, because he has ventured over there, he’s like a one person mission. And he helps to evacuate Ukrainians from that eastern portion of the country. He has saved hundreds of lives. He’s been interviewed by NBC News and all these folks. And he is right there with the ecosystem that’s pulled together. And folks could ask him questions. So, they did a great job. So, y’all check it out. You got to join March 7th, 11:00 a.m. Eastern Time and help out. What a noble mission this is. Greg, your quick comment, and then we’re going to bring on our featured guests here today.
Greg White (23:01):
Yeah. I mean, whether you are just interested and just want to hear what’s going on or you think you might be able to help, tune in. A lot of people have just tuned in with curiosities and have been able to find a solution to help over there. So, it’s all 100 percent of everything raised or donated goes right to the people in need. Not a single dollar in administrative costs. In fact, there are administrative costs which are being covered by Enrique and his team or some very generous shipping rates by – is it Kuehne+Nagel? I think Kuehne+Nagel and one other —
Scott Luton (23:46):
Maersk.
Greg White (23:46):
Possibly.
Scott Luton (23:47):
Yeah. Well, regardless, it takes a village and there is a wonderful community that’s pulled together with this singular mission in mind, which is to help. So, y’all join us on March 7th, 11:00 a.m. Eastern Time to learn a lot more. And the link to join in is in the comments. Okay.
Scott Luton (24:05):
We said it’s going to be fast moving. We’ve walked through headlines. We’ve walked through some hot take – goodness gracious – from Greg White. We’ve talked Super Bowl. We’ve talked humanitarian, because we’re in a position to really help others in ways that many other folks in different industries aren’t in that same position to do. And, now, we’re going to gain more insights and expertise from our featured guests here today. We’ve really enjoyed our pre-show session. So, with that said, I want to welcome in Leah Knight with the Direct Spend Solutions team at SAP. Leah, how are you doing?
Leah Knight (24:41):
I’m doing great, Scott and Greg. How are you both?
Greg White (24:45):
Very good. Thanks. Welcome aboard.
Scott Luton (24:48):
Welcome aboard. And by the way, I love that colorful scarf, Leah. I’ve got to get one of those.
Leah Knight (24:55):
Thank you. It would look good on you.
Greg White (24:58):
It’s an ascot for you, Scott, and you tuck into your shirt and look like Cary Grant.
Scott Luton (25:02):
Ascot. Yeah, ascot. Well, Leah, I love that. And, again, we have really enjoyed our pre-show sessions. I love what you and your team are up to. So, Greg and Leah, our fun warmup question is not going to be related to fashion. It just kind of dawned on me how pretty that was. Let’s talk about food, one of our other favorite topics here. So, Leah, hard-hitting question, tomorrow is National Pancake Day. Parades everywhere. That begs a question in my mind, at least, pancakes or waffles, IHOP or Waffle House? Weigh in, Leah. Your take.
Leah Knight (25:38):
Scott, I was not expecting such a tough question. Let me give it some thought. You know, I actually love them both. It really reminds me of long ago road trips, taking a nice long break from the road. But, you know, I’d have to go with waffles because you can’t beat that crunch that you get in good waffle.
Scott Luton (26:05):
Oh, man. Leah, I’m with you. And that crunch, as we were talking pre-show, a little bit of butter and syrup, especially at Waffle House – I’m partial there – oh, goodness. Greg, what’s your take though?
Greg White (26:16):
Well, you know, Leah made me think about my take. So, I am – I don’t know what you would call it – I love this term, “Why be a slave to the ore when you can have the freedom of the end.” I love them both. But, Leah, you made me think of old-fashioned waffle irons, so I always think of my great-grandparents when I think of waffles because they had an old-fashioned waffle iron actually made out of iron. And it was impossible. Only my great-grandmother could do it. It was impossible to make waffles. So, whenever we would go over there, which was very frequently, she made delicious waffles. She was the only one who could cook them. Nobody else could figure out how to make that thing work. There was no light. There was no power. She put it on her gas stove. But, man, they were spectacular.
Scott Luton (27:10):
It sounds.
Greg White (27:11):
Today, it’s waffles. Yeah. Today, it’s definitely waffles.
Scott Luton (27:13):
Leah, I don’t know about you. I’m just in love with the process that Greg laid out there. They could have been making anything. But I love being in the kitchen with folks that know how to cook. It’s such a fascinating experience. And the food being good is just like gravy on top. All right. A couple quick comments, as we knew, this tough question, we get some comments. Hey mom, love ya. Leah Luton from Aiken, South Carolina says, “Gracie, my second daughter, would say, IHOP and pancakes. That girl loves some IHOP. You’re right. Mom, you are right. And Amanda says, “I’m with Leah. Tough choice, but I love the crunch of waffles, a bunch of butter and syrup. Yummy.” And Stephen says, “Hey, buttermilk pancakes.” Buttermilk pancakes.
Greg White (28:00):
There you go. Yeah.
Scott Luton (28:01):
Yeah. Good stuff there. By the way, Stephen hails from Boston. Him and, of course, the one and only, Kelly Barner. And Karen says, “Mm-hm as I eat my avocado.” Sorry, Karen, but good job sticking with healthy, healthy food.
Greg White (28:17):
Yeah. That’s right. Somebody’s got to live true to this.
Scott Luton (28:21):
That’s right. All right. So, Leah and Greg, and all of y’all, thanks for playing along. Let’s move into, though, more headlines really. And, Leah, I know you’re tracking a few things. I want to pull up this first graphic here as we talk about a couple more articles here. A few weeks ago, our friends at Supply Chain Dive published an article. I think it’s part of a series. In this case, the article is focused on supply chain shortages in 2023. One of those four items, Leah and Greg, was Lithium and other EV components. So, Leah, tell us more here.
Leah Knight (28:57):
Yeah. Absolutely. You know, the automotive industry is really transforming as demand for electric vehicles and connected cars is just completely changing market dynamics. And that’s creating a huge impact on procurement. And so, this article discusses how the price of lithium – lithium is one of those goods and tight supply. And it’s also a very critical part of electronic vehicle content, the battery content – well, the prices of lithium have surged more than tenfold over the past two years. Tenfold, I mean, you can imagine.
Leah Knight (29:31):
But then, on the other hand, the article also discusses how 2023 could be the fourth year of semiconductor shortages or it could be the year when demand and supply finally stabilize. So, both of these examples on kind of complete ends of the spectrum show that procurement teams are under a lot of pressure to manage commodities and to manage suppliers where supply can be scarce. And, also, to manage pricing agreements when supply starts to increase, prices go down, and everything is a lot less scarce.
Scott Luton (30:09):
All right. So, Greg, we have known for years now that procurement is cool, number one. And number two, has a seat at the table more and more so here lately for some of the reasons that Leah points out. Your thoughts here around lithium and EV component shortages and what we’re doing about it.
Greg White (30:28):
Yeah. I mean, the shortage is real because it’s a natural resource. Lithium, cobalt and, of course, the rare earth minerals that go into semiconductors as well are all natural resources. So, much like fossil fuels, the resource is finite. So, we have to manage that very carefully. And, also, of course, if you’ve ever been to Chile or Argentina or any of these African countries or China, where they mine this stuff, I’ll say relentlessly, it’s incredibly destructive to the planet and permanently so. So, it’s a real challenge.
Greg White (31:13):
And, Leah, I don’t even know how practical this is, but one of the things that I have long advocated for in my over two decades is we need to figure out other ways to build batteries. There are other potential methodologies out there that would not take these types of material or not all of these types of materials, and could reduce both the cost potentially at this point now that costs are so high. It actually opens the door for looking at some of these other methodologies, I guess is the point. That’s not really the job of procurement, but it’s often prompted by procurement because they go ten times as much. Is there any anything else we could substitute for this? That, often, will drive scientists and researchers to start to look for other types of resources to tackle this problem. And I think that it’s something we should seriously consider.
Scott Luton (32:09):
Excellent point, Greg. And I see you nodding your head, Leah. Anything else you want to add before we move on to our next article here?
Leah Knight (32:15):
Well, actually, I think that’s a great segue to the next article, because that’s one of the things they question, Greg, so, you’re spot on. Will this cause the fundamental makeup of electric vehicle batteries to change? And if so, how? Maybe redesign with different kinds of components? Will that impact the longevity of the battery? Will it make them more difficult to drive?
Scott Luton (32:42):
We’re going to dive in head first in just a minute to the second read. I want to share a couple of quick comments here. And by the way, folks, we got a link to the Supply Chain Dive article, this first one here we covered with Karen right there in the comments – I’m sorry – Leah right there in the comments, so y’all check that out. I’m saying Karen, because Karen is in the comments as well. And Karen says, “As a result -“going back to something, I think, Greg mentioned “- Tesla suppliers opening a new plant that’s dedicated to lithium ion batteries.”
Greg White (33:14):
Well, it was Elon Musk – is that how you say his name? – Elon Musk three years ago who said, if you want to be the next billionaire, start mining lithium. And I think Leah has validated that position.
Scott Luton (33:28):
Right. And Shelly, also, you’re talking about some of the mining practices, Greg, that industry’s becoming more and more aware of, thankfully, so we can do something about it. Shelly says, “I cringe when I think about the mining, the destruction, and the possible child labor. And Kelly’s article -” Kelly Barner “- from last week, Russia or China, how do you choose?” Good point there. Okay.
Scott Luton (33:52):
So, Leah, you mentioned that was a great segue. I agree. Let’s move to this next article here that we’ve got teed up. Now, here, we want to dive in a little bit deeper to the wonderful world of automotive. One of the most important industries around the world, really. In particular, the supply chain and technology themes for that industry in 2023. So, tell us more, Leah.
Leah Knight (34:14):
Yes. Absolutely. So, this article discusses a number of things, but one of the things that really caught my eye was its discussion of new sources of growth for automakers, in particular in the area of connected services. So, that tremendous opportunity there, also some impact on procurement. And as we just discussed, as Greg kind of divined, it also talks about different scenarios for electric battery evolution, especially as new legislation is likely to drive up demand for these cars even further.
Leah Knight (34:50):
So, you know, Scott and Greg, both of these points really show how automakers are needing to drive and develop new innovations they need to make heavy investment in new technology. And if you think about that, all of that really requires some new skillsets in procurement, new skillsets in supply chain because procurement, especially, they need to go find and source the best suppliers for these new types of commodities, for these new types of technology. And then, they need to partner with them very effectively in new product development. Or the alternative is building all that expertise up themselves. So, some pretty significant sea changes in the procurement area in this industry.
Scott Luton (35:33):
Great point, Leah. And having the technology and the talent to take advantage in a good way, business way, of the opportunity that’s out there that you’re speaking to is absolutely critical. Greg, speak to that, whether some of the changes that automotive industry is going through or some of the things more related to the teams that are powering the organizations through industry evolution right now?
Greg White (36:00):
Yeah. I mean, there’s a couple things that vex me slightly, and that is that we’re not incentivizing finding new and less destructive sources. We’re incentivizing with some of the legislation that’s recently been passed, destroying our part of the world. Whereas, we used to be able to leave that destruction in these third [inaudible] – where my family is from, Argentina. But that’s the way most people look at it is who cares. It’s only Chile and Argentina. But now it’s about come home to Canada and Mexico and the U.S. because of this incentive of finding some of these materials and mining some of these materials in the North American area so that these cars can continue to be called American. So, I think we’re fighting that headwind, of course.
Greg White (36:54):
Also, to Leah’s point earlier, this is a dramatic shift of focus of scientists and researchers. But it’s also, I think – and, Leah, I’d love your thoughts on this – it’s a dramatic shift in the perspective and the role of procurement professionals. I don’t know how many procurement professionals are really equipped to go, “I don’t want you to incrementally innovate. I want you to disrupt and disintermediate other types of products,” because we have this viewpoint on the world, which is you’re destroying the planet in a new way instead of fossil fuels doing it. We’re physically destroying the planet. We need you to stop doing that and find some other way to do it. I just don’t know if anyone in any company has that kind of power, nor do I think that they have the training or expertise to be able to do that. It’s going to take a really, really joint effort between those researchers, procurement professionals, and probably C-suite executives to really make that necessary change happen. I see it as being very difficult, though, because we’re not really incentivizing that.
Scott Luton (38:06):
Leah, any thoughts to that?
Leah Knight (38:09):
No. That’s right, Greg. It drives that kind of collaboration you mentioned across procurement and research and product development and the board level. But, also, I might add in the suppliers themselves, you know, procurement and suppliers and these other stakeholders, need to find better ways to work together to collaborate on product design, for example. See if they can find more either different types of battery technology to avoid depleting what we have or other ways to manage costs and drive sustainability. You know, the OEMs need to be able to make sure that their suppliers and their supplier’s suppliers are also building sustainable businesses and sustainable supply.
Scott Luton (38:56):
And, Leah, to your point about folks up and down the supply chain getting together and trying to find new opportunities, sometimes it’s just a matter of asking if the specs can change. Which, I’ve done when I was supplying parts with a wonderfully talented team in metal stamping to automotive and other industries. Sometimes you get in an engineering meeting, you ask the question, and the specs can change a little bit. And then, that opens the door for new ways, new innovations, new product development, new suppliers, which can help, not only lower costs, but create more flexibility, maybe easier manufacturability, for what you’re trying to do. So, excellent point, Leah and Greg. Leah, I see you nodding your head. Anything else you want to add before we talk about what you and the team are doing over there?
Leah Knight (39:45):
I would just agree with you, Scott, that as manufacturers or OEMs work together with their external manufacturers, they can collaborate on design for manufacturability and designed for sustainability as well. So, there’s tremendous opportunity through collaboration.
Scott Luton (40:01):
Tremendous.
Greg White (40:02):
So, a lot of these automakers have venture arms as well, where they’re actually funding the innovative or helping to fund the innovative companies that could come up with these solutions. I mean, it may be that procurement starts to say, “Hey, this is a direction we need to go. Can you guys go find some investments in this area and start to nurture some of those truly innovative companies?” I don’t know what the timeline viewpoint of automakers is these days. I can tell you it’s far longer than it was in the ’70s where they’ve made cars to intentionally break down so they could sell parts. But they’ve come a long way since that. I just don’t know if they’re looking far enough into the future to say, “Yeah. This is going to be a problem just like fossil fuels has been in another 10 or 20 years.”
Scott Luton (40:55):
All right. So, so much to go on. I’d love to dive deep in a number of these topics we’re tackling here on The Supply Chain Buzz, but, Leah, I bet you got a jam-packed schedule here on this Monday. Okay. A couple quick comments, and then we’re going to make sure we know what Leah and her team are doing at SAP. Let’s see here. Mark says, “Thousands of electric cars are hitting the roads when our electricity supply is already struggling.”
Greg White (41:23):
And coal fuel, if you’re in the UK, by the way. Their electricity supply is almost solely coal fueled.
Scott Luton (41:31):
Yeah. Karen and Stephen both are talking about where some of those new minds are located. Some of those locations might surprise you, so y’all check that out in the comments. Okay. So, Leah, bringing it back to what y’all are doing, the Direct Spend Solutions team at SAP, so in a nutshell tell us how are y’all helping organizations?
Leah Knight (41:56):
Yes. Thank you for asking, Scott. So, SAP is helping companies grapple with these problems by offering some product sourcing solutions. And the product sourcing solutions help procurement manage a full end-to-end procurement process for their products. So, starting with the design of the product, the launch of the product, and then going all the way through volume manufacturing and renegotiating prices of these huge multi-year contracts that are pretty typical in industries like automotive. And so, you know, in particular, these products help companies partner with their suppliers to work on co-innovation, like we’ve been discussing, and also managed materials that have pretty volatile, easily changeable costs. And the solutions are being adopted by large OEMs, but also new startup companies alike, anyone who needs to collaborate with suppliers on design processes or manage those volatile commodity costs.
Scott Luton (42:50):
Yeah. The real fun stuff in supply chain, Leah, is that right?
Leah Knight (42:54):
That’s right. That’s right.
Greg White (42:56):
It is. I mean, the challenge of this innovation or disruption, or whatever you want to call it, this intermediation, I mean, it is fun for some crazy people like me. But I think it’s this spirit of continually recognize learning from the ills of the past. I don’t think anyone intentionally tried to destroy the planet with fossil fuels. They were there. They were plentiful. They were relatively cheap at one time, and still, frankly, are relatively cheap. And they evolved it rather than completely altering it and changing to a different methodology. And we’re just doing the same thing. I think what we need is to recognize that we need a bit of a quantum leap here to a next level of understanding to prevent further destruction of the planet as we’re trying to eliminate destruction.
Scott Luton (43:52):
Yeah. Great point, Greg. And great T.V. show, Quantum Leap, Leah and Greg. And they brought it back.
Greg White (44:01):
You’re kidding me.
Scott Luton (44:02):
No. They brought it back. We’ll have to cover that in an upcoming edition.
Greg White (44:05):
How many seasons did it run the first time? Because I’m looking for a show and I don’t have one.
Scott Luton (44:08):
I don’t know, but Scott Bakula must have been in a thousand episodes. If y’all remember that show from the late ’80s and early ’90s.
Greg White (44:14):
I do not. I remembered that it existed. Was it —
Scott Luton (44:18):
Yeah. Maybe we need to ask their team how we can develop some of these new technologies we need to think travel time. I bet they can power cars in a safe and sustainable fashion. Okay. So, Leah, y’all have brought a resource, an SAP white paper entitled Mitigating Supplier Risk via Product Sourcing. Now, I think we’ve got a link that folks can access, and we’ll drop that in the comments. But why should folks check out this resource? How can they help them?
Leah Knight (44:50):
Oh, it’s a really a nice white paper from a third party researcher, IDC, and they share some market data about what procurement professionals are doing about this. And they focus on engineering oriented industries, like automotive, like industrial manufacturing, and provide a nice market view of what companies are doing today, what they expect to do in the future, and the types of solutions they can use to help them.
Scott Luton (45:17):
Outstanding. Greg, any thoughts? I’ll tell you, supplier risk, if the world has learned anything over the last few years, we’ve learned the immense value of true strategic risk mitigation or risk mitigation strategies, and just how important that is across industry. Your quick thoughts there, Greg, about this resource, about what Leah mentioned, or just supplier risk in general.
Greg White (45:46):
Yeah. I think that two lessons that we learned immediately upon all of the shutdowns, lockdowns early in the pandemic is, one, if you’re mean to your suppliers and you have an emergency, it’s too late to make friends. And, two, don’t be single threaded. Don’t forget about potential backup suppliers, which Rick McDonald talked about last week when we were talking with him. So, those are two things that I’m sure are in some way or fashion are in that document. But those are things that we need to be thinking about is maintaining the business relationship as productive and effective for both parties. And, of course, have a Plan B or C.
Scott Luton (46:35):
Or D, E, F, and G.
Greg White (46:37):
Yeah. Who knows, right? Well, Leah, you were talking earlier about commodity type products that are available widely. But the distribution or sourcing of them can be very disparate, so I think that that’s a great example of where you need to have a plan B, C, and D possibly.
Scott Luton (46:58):
Leah?
Leah Knight (46:59):
Yeah. Exactly. It’s frustrating when a fairly inexpensive and non-strategic component can hold up production just because it’s in short supply suddenly.
Scott Luton (47:09):
Yes.
Greg White (47:10):
How many parts does it take to build an F-150, Scott?
Scott Luton (47:15):
All of them. All of them. We got to find out who brought that to us. We’ve got lots of mileage out there.
Greg White (47:24):
Leah, a few weeks, maybe months ago, we were talking about the fact that Ford could not ship – talk about a common part – their F150s because they were out of the blue ovals that said Ford on them. That’s exactly [inaudible].
Scott Luton (47:42):
The epitome of what we’ve been going through [inaudible].
Greg White (47:47):
I mean, nothing enunciates that more clearly than that.
Scott Luton (47:48):
Yes.
Leah Knight (47:49):
Yeah. And when you’re dealing with, literally, thousands of parts that make up an automobile or a truck, it can be easy without a programmatic approach, you know, to lose track of that.
Scott Luton (48:03):
Very true. All right. So, folks, we invite you – I think I shared this link – you can download that white paper that Karen – or that Leah – Karen, man, I’ve got to get some of her comments in.
Greg White (48:16):
And you were worried about calling her mom because her name’s the same as your mom. Now, you’re calling her Karen? You’re really wind on YouTube. [Inaudible] catches the word Karen, this will wind up on YouTube with a million views. [Inaudible] we did a good job.
Scott Luton (48:31):
That’s right. The good news here is you can access this white paper, this resource that Leah has brought to the table right here using this link there, and let us know what you think about it. Beyond that, Leah, how can folks connect with you and what your team is doing at SAP?
Leah Knight (48:52):
Oh, please connect with me on LinkedIn. I’m always looking for opportunities to connect with people.
Scott Luton (48:56):
Wonderful. And I’m sure they will enjoy meeting and getting to know you better and what you do and what you’re doing out in the industry as much as we have here. So, really appreciate you spending a portion of your Monday with us here on The Supply Chain Buzz. And, folks, we try to make it really easy. We have dropped the link to Leah’s LinkedIn right there in the chat, so y’all check that out. Okay.
Scott Luton (49:22):
Well, Leah Knight, we really appreciate your time here. You and part of the team at the Direct Spend Solutions portion of SAP. Thanks so much. Hope you have a wonderful week ahead.
Leah Knight (49:35):
Thank you for the opportunity, Scott. Thank you, Greg. And thanks everyone for joining.
Scott Luton (49:41):
All right. Man, really enjoyed chatting with Leah. So, Greg, we covered a lot of ground here today, both before Leah joined us and, of course, when she did join us. Man, really a wide ranging conversation. If you had to boil it down to one thing, maybe, that folks have got to take away from this conversation, if they forget everything else, what is that one thing, Greg?
Greg White (50:08):
Well, I’d like to point out that the only Karen we had on the show today was a very positive influence and brought some good knowledge. So, the sooner we can do away with that whole notion of Karen – I’m not sure why we picked that name because I love that name, personally – but anyway, the sooner we can do away with that, the better. The other is that, look, procurement is not just buying the stuff that’s out there, and I think we forget that a lot of times. It’s also shaping the market to provide, to your point, Scott, can the specs change, should the intent change, certainly, can we impact the outcomes of the company. And you certainly can do that with the kind of role and the kind of experience that Leah was talking about, that there’s so much that they can do to influence innovation and changes in the marketplace. I think the sooner we start to link supply chain and procurement with the corporate goals and give them both specific accountability and specific authority to help enforce those goals or help to reach those goals, the better.
Scott Luton (51:31):
Yeah. Agreed. Agreed. Folks, make sure you check out – connect with Leah first. What a pro out there doing big things. And check out that white paper, more resources, more perspectives, always good. Hey, Mick, appreciate that perspective and your feedback here. “Worthwhile program,” he says. Thank you. Let’s see here. Karen says, “I’ve got to repackage those as clean trucks and ship them back to the Ford –“
Greg White (51:59):
Generics. We could call them generics.
Scott Luton (52:00):
Right. Yeah. And let’s see here, I had a comment earlier. Stephen is also a Quantum Leap fan. He says, “Quantum Leap 2 just launched, but Scott Bakula isn’t in this new reboot.” That’s right. That is right. But, Stephen, thanks for joining us here today.
Scott Luton (52:20):
All right, folks, I want to make one more plea. Talk about a worthwhile effort that’s really helping a ton of people out there. Join us March 7th, 11:00 a.m. Eastern Time for Leveraging Logistics for Ukraine. I promise you, you won’t regret that you did. You don’t have to give anything. You don’t have to say anything. Just show up and connect the dots and maybe find a way that you can make a difference. The link for that is in the chat.
Scott Luton (52:46):
Okay. Greg, we got a big week of programming ahead. Always a pleasure to knock out these conversations with you. Thanks for joining us.
Greg White (52:54):
Likewise.
Scott Luton (52:55):
Big thanks again to Amanda and Katherine behind the scenes helping make production happen. Thanks for all the folks. Man, I couldn’t get to all the comments. Hey, James, looking forward to hearing about the Bern’s experience. I haven’t been there.
Greg White (53:09):
Yes. You’ll have to come into the comments and share that. So, we’ll get that settled up over the next couple hours.
Scott Luton (53:17):
Undoubtedly. Undoubtedly. And, hey, big thanks, of course, to Leah Knight and SAP for joining us on a very busy Monday for her and her team, I bet, and sharing some perspective and some resources. A lot of good stuff.
Scott Luton (53:30):
But, folks, whatever you do, you absorb all this information, all this perspective and expertise, and then you got to do something with it. Deeds not words. And on that, on this Monday afternoon Eastern Time, at least, our team’s challenging you to do good, to give forward, and to be the change that’s needed. And with that said, we’ll see you next time right back here at Supply Chain Now. Thanks everybody.
Intro/Outro (53:55):
Thanks for being a part of our Supply Chain Now community. Check out all of our programming at supplychainnow.com, and make sure you subscribe to Supply Chain Now anywhere you listen to podcasts. And follow us on Facebook, LinkedIn, Twitter, and Instagram. See you next time on Supply Chain Now.
