Networks and Nodes: The Future of Moving Stuff

Speakers

• Dawn Vance, Director of Global Logistics Infrastructure and Sustainability, Nike, Inc.
• Edgar Blanco, Research Director, MIT Center for Transportation & Logistics (CTL)
• Mads Stensen, Project Manager, Sustainability, Maersk Line
• Frank Clary, Senior Manager, Corporate Social Responsibility, Agility
• Raj Sapru, Director, Advisory Services, BSR (Moderator)

Highlights

• In order for all of the actors in the supply chain network to understand their environmental impacts, they need to think in new ways, create robust tools to manage the large amounts of data transactions, and build common standards for reporting on environmental performance.

• The more consumers understand about the environmental impacts embedded in the products they buy, the more likely they will be to purchase more sustainable products. But to make this happen, companies need to give consumers the relevant information.

• To improve sustainability in the complex supply chain network, collaboration is necessary among carriers, shippers, ports, terminals, and logistics providers.

Memorable Quotes

“Nike is allowing the supply chain to grow, not by moving manufacturing sources closer to retail outlets, but by allowing new factories to be established in areas where there are growing sales.” —Dawn Vance, Nike

“Good logistic providers are technology companies in disguise.” —Frank Clary, Agility

“Innovation needs to happen on the product side before it can bring about changes in the supply chain.” —Edgar Blanco, MIT

“If shippers pick the best (carrier) performers, they can drive changes within the supply chain. But to do this, carriers need to be more transparent. And there needs to be a common measurement system or standards for shippers to make comparisons between carriers to make these decisions.” —Mads Stensen, Maersk

Overview

As an entry point for an audience of transport providers and carrier owners, shippers (retailers, brands, or manufacturers), and the NGO community, Sapru invited Vance to introduce the typical path that a finished product would travel, from the manufacturing site to the consumer. This helped the audience appreciate the complex links in the supply chain, in which the product travels from the factory to the port (typically via road or rail), where it is consolidated with other products before it is shipped to the destination wharf, where the product is unpacked and distributed to the retail outlet, where it finally reaches the end user.

After this discussion, one participant asked what a collaborative distribution model might look like among manufacturers. Vance responded that, for Nike, collaboration begins at the factory level, where many different brands produce at one site. These brands then work with the same logistics providers who help coordinate distribution. Nike also works with carriers such as Maersk to manage waste and emissions along the product journey. From the perspective of the freight-forwarding company, Agility, Clary said he sees collaboration happen organically, as many shippers already work together hiring common third-party logistics providers and using joint resources.

The group then discussed how technology supports collaboration and efficiency creation through different parts of the network. From the carrier perspective, Stensen explained that carriers have a much heavier asset base and are therefore more invested in working with new technologies and IT systems to track containers and ensure delivery at the right time at the right locations around the world. Meanwhile, Blanco suggested that while data collection is important, effective use of that data is important for decision-making.

As an extension of this topic, Sapru asked panelists to consider the actual problems that these IT solutions are trying to address. Vance spoke of two challenges: balancing the relationship between emissions and costs at different stages of the supply chain, and choosing the lowest carbon mode of shipping against the speed of these modes—that may give some retailers a competitive advantage. Stensen described how technology that measures emissions such as sulfur can help carriers focus on the environmental impacts of fossil fuel burning. Even though shipping is 70 times more efficient than air transport and five times more efficient than road transport, there is still an opportunity for the industry to reduce its emissions.

Next, session participants convened in small group discussions to brainstorm ways that the supply chain network can be “repackaged” for greater sustainability. One group identified three ways to achieve this goal: Give consumers more information about the sustainability impacts of products so that they can drive change through purchasing decisions; support collaborative organizations, such as BSR’s Clean Cargo Working Group, in providing companies with data to inform decision-making about their performance; and invest in manufacturing in emerging economies through to create jobs that can support development in local communities.

The other group looked at the system from the perspective of a post-globalization supply chain. They identified the need for shippers to use their role as purchasers of transportation services to drive efficiencies in the supply chain and create a business case for change. Logistics providers should avoid incurring external costs shippers aren’t willing to pay. To be successful in emerging markets, companies can draw lessons and best practices from developed economies to reduce impact. In terms of recycling and reusing products in the supply chain, companies can work with trade associations and other stakeholders to apply standards to identify what they are reporting and how to measure it.