 Thank you for coming back after the break. Thank you to the two of you who have filled out our survey. So I'm Dave Carell. I'm your Sherpa for your 2.30 PM pivot to start thinking about sustainability in the supply chain. I'm really excited to do it, and I want to do it in a couple of ways. We're going to start with some of the cutting edge stuff first. So my colleague, Dr. Josue Velazquez, is going to share some of the great work he's done on sustainable logistics over really the last 10 years. Then we're going to pivot into a panel discussion with a great group of thought leaders. I've had the good fortune of already convening, and we're going to think about one of the things that we've discovered in our long-term survey project is that sustainability tends to mean different things to different people, and hopefully we can zoom in on some of the meanings that are most relevant to this audience. Well, let's start with some of the coolest stuff first with that. Josue. Thank you so much. Thank you, Dave. All right. So it's always hard to start the session after Joe Kofling just came to stage. So let's see what we can do. So the idea, as Dave Correll mentioned, is that I'm going to try to lay down the foundation of what we're going to discuss also in the panel by showing a little bit of the basics of the connection between sustainability with supply chain. And then after that, I will also convey a few messages related also with the research outcomes we had in the last year. So one of my roles that I do here as a research scientist, I lead the sustainable supply chain lab. And I also teach the core sustainable supply chain management, which to the best of my knowledge is the best course ever at MIT. By the way, have you taken the edX course on sustainable supply chain management? Do you know what I'm talking about? You've taken it? Of course you have. It's great to see you. Thanks for coming. He was also my student at MIT. All right, so let me just start with the foundation. Why should we care? And probably this slide is not relevant anymore because for some reason you are still here in this panel trying to discuss about sustainability. But it's always important to come back to basics. So one of the things that we always discuss about the relevance is not related to whether you believe or not in the science and the outcomes, particularly when we are looking at this from the practical perspective, meaning companies, which the nature of the companies in essence is to be economically sustainable. And that's okay. This is still one of the dimensions. But why we should care about considering all the type of dimensions of sustainability, like the environment, like the people, like governance. So one of the things that we've been discussing has to do with the consumer preference. And by the way, I was very pleased to see that in the past session, I don't know if you noticed, but one of the options when they say about the consumers, what you can actually provide at what matters for the consumers, the second option was sustainable supply chains. And that was funny because I was showing this to one of my colleagues and it was like, oh, I didn't even notice it was the second place. Actually, people are now more aware about importance and we know that the new generations might potentially create a drive also to look into this. Now, always the discussion is whether they claim they care and another is whether they are willing to pay for it. And that's always a key question again. But again, this is one of the risks. All the things are related also with plenty of the examples and it was nice to see also at the beginning the presentation of Walmart, discussing also how they are approaching the efficiencies and some of the examples that they started working on sustainable projects had to do also with the opportunity to simply reduce cost. When you are actually able to have similar outcomes with less energy that you are required, usually you are more productive and in general terms, you may agree this might actually reduce also cost. And on the other side, we have also the regulatory pressure which I also hope we can also touch base on this during the panel. We know that these things have moved in Europe started long ago. This is usually how Europeans get things done which is totally okay. They put pressure to have policy makers and strict regulations while in the US is more driven by industry, right? And sometimes both with innovation in different ways. But we know that there is a change. Just at the beginning of the year, actually December started some announcements from the SEC, which you probably are aware that now is gonna be really required and reinforced that carbon footprinting that you're reporting now to the Carbon Disclosure Project to the CDP. And if you are claiming that you care about the scope three emissions, which are those emissions that are not related to your assets, then you are gonna have to prove and show cost that you are in fact doing something about it. And that's gonna change entirely the game. So there is a risk. And of course the shareholder pressure that are still people that really believe, right? Potential CEOs of these big two companies are remember saying I'm not thinking what's gonna happen tomorrow or in my operations in the following two years. I'm thinking whether the organization is gonna exist in the next 10 years or 20 years. And those problems are different because if those crazy scientists, and I include myself in one of those, are really saying that something is gonna happen with the planet and species, then therefore we need to guarantee that our world will continue so that we can continue exist as a company. So we have different risks and just to create awareness. But we know that this is not unique. When we look at the World Economic Forum, I just Google a few months ago, what are the most severe risks for the next 10 years? Those that you see in green are related to the environment. Those that you see in the red are actually related to society. And you can see the others are economic and geopolitical, which we know is actually very real. But if you actually are even too strict with the definition of sustainability, which again we are gonna discuss it, you may actually at least end up with saying that 50, 60, or 70% of those topics are actually related to sustainability. Now other things we observe this started with the climate pledge. And this was in a way also led by Amazon, in which in a way many of the companies, many of your companies started also making statements that you're gonna reduce your carbon emissions in the following years, that you're gonna do and pursue the sustainable development strategies, United Nations goals, and try to achieve in different fronts the strategies that will get you to be a sustainable company. I also got the privilege to speak in the APIC last year, in which they asked me, I was really surprised, to give a presentation in one of the key choke points, which is the lack of understanding of green supply chain management. This is again risky because that means policy makers, particularly in trade, are now thinking in what else they can do to really bring more reinforcement to what is happening in the organizations, particularly when we are moving between all these countries here. So there is a lot of things, but I also like to show, and I saw some of the slides was having similar question, I like to show this one last year, Jim Rice was kind enough to invite me to give a presentation to our corporate partners about the different research I'm currently leading on sustainable logistics. And then I ask a few questions. The first question was, first one, does your company have explicit goals and strategies on sustainability? Similar to what we saw there? So this was the answer. The vast majority said yes, was I'm not sure, very likely said yes, but still we have also the challenge of communication internally. Now the second question was, what dimension? If you are interested and your company is actually doing something, what dimension of sustainability are you mostly interested? Oh, again, we can have a definition here and discussion what is the right dimension that we can consider. If you have this agreement with me, you consider all that and that's totally fine. Now we saw again, has to do a lot with environment. I can tell we are having a lot of different CPGs companies, retailers, logistics providers. So it makes sense that the environment probably is quite relevant, although we know that there are others, for instance, fast fashion, clothing industry which social is actually very relevant as well. Now the last question was about the carbon reduction targets, whether your company has or not clear reduction targets for the next 10, 20, 30 years. It could be that is some of your key customers as well because this is also how it happens. If you have a big player, that player puts pressure to other entities in the supply chain so that they actually do something for the environment as well. And then again, it looks all the, practically all the charts look quite similar. So there is a lot of movement into this. It was actually just presented last year, which I believe it was very consistent with what we saw in one of the responses, but we can probably check it out later. Now everybody's moving towards this. It seems that sustainability becomes now part of the game and we know that this has to do a lot with environment as well. All right, now why is this a supply chain problem? As you know, we became famous after the pandemic. Before we knew we were important. Now everybody knows that we are important. So that's very cool. We don't need to explain anymore to our families and relatives what exactly we do for living. This supply chain, this is already known by everybody. Now the reason is because everything is supply chain and usually when I teach this in the class, we have students from different backgrounds. This is for me the best way to explain what do we do? We are in the discipline, field, science and art that makes the dreams come true, right? So somebody has a business idea, corporate strategy, then you need to create something in supply chain to make it real. And this is how it works. In this case, when you see this young lady coming there and buying this shirt, some statistics suggest that that shirt has traveled more than what we are going to travel individually for the rest of our lives. And that doesn't mean we are not traveling enough. It means there are so many entities, particularly in the upstream, that are touching that particular product, even as simple as a just a shirt that might have components extracted from South America or others maybe in South the US, in Texas, Cotton, Polyester, maybe transported to China to do an assembly and then later sent to part of Europe for dying and then later try to be sold some other parts of Europe. And then all these operations and movements are actually done by experts in supply chain that are trying to make sure that this lady, when it goes there, that it's actually the correct assortment of products, you know, the right amount with the quality. So there is an indicator of service level, but also with the indicator of financial performance, making sure that this is financially feasible and this is usually the two indicators we've been looking at. Now the trick here is that it's precisely these movements, you know, what is causing the damage for the environment as well or impacts related also with any aspect of sustainability. So it's actually those decisions and this is something that I've been discussing plenty when we work on defining hotspots for companies and they say, can you help me identify where are my hotspots? For instance, in carbon emissions, whether it's a particular warehouse, a particular lane in transportation, it turns out that those particular entities in the supply chain are having those hotspots not because there is something wrong with them, but it's something wrong with the decisions that are causing that. Let me explain myself. If I find someone that is having an issue with hopefully no one, by the way, it's just an example, but has an issue with a kidney. You may actually say, well, let's just have a kidney transplant and bring actually a lot of technology so that that never fails. Well, that makes sense. This is like the approach of the investment of the equipment. But the other approach is to look at what are the decisions that our individual is making to actually have that instead of doing a kidney transplant, why don't you, I don't know, drink more water, stop drinking alcohol, start doing more exercises. So the supply chain, particularly when we study the identification of hotspots in sustainability, is strongly related with the decisions we make. We can have expedite deliveries, not because something is wrong with transportation, but because it's something wrong with the forecast. Do we know what are the environmental implications of the error in the forecast that you guys are having? Do you have any idea how your replenishment strategies in inventory planning are actually affecting the rest of the hotspots in the supply chain? So the connection with the decision is what makes a difference. And this is also something that matters when we study supply chain management in the relation with sustainability. Now, let me just have my definition together with our colleagues on what we understand as a sustainable supply chain. And you may recall that when we discuss about sustainability, we are always discussing about the future. So we are talking about the survival of our species and providing the same quality of life for the future. It's always about the future. So what we'll consider sustainable or not 10 years ago or 20 years ago, it has changed. And this is something that therefore needs to be monitored all the time. So now we are moving towards EVs, but now we are having the challenge of the scarcity of the products, the lithium batteries. If we move for hydrogen, why are also the resources we need to produce that? So every time we make a decision there are always implications. And the trick here to become a sustainable organization is to make sure that you are in control mapping all the time, understanding what are your vulnerabilities in the supply chain and also having more visibility, particularly upstream but also downstream in the supply chain. So let me just show you the both definitions. First, as I said, the key is to proactively monitor and manage particularly those vulnerabilities. And second, who is better? The one that does this is also better, you know, understanding what is happening currently, but also what are the risks associated with this in the future. And this is what exactly is gonna make the distinction whether you're gonna be in the game or not. All right, so now this is what we do in our lab. You know, our lab works with organizations. We take a very practical approach to look at different dimensions, to find recommendations that are gonna also look at the dimension of the financial performance, whatever we are recommending in this. So we help organizations improve their supply chain operations logistics, you know, by creating the applied innovative research looking at the growth, but also the social and environmental sustainability. Now, this is the way that we do it. We try to understand, you know, in the impact effort chart, usually my friends, consultants love this. So if you have to put any effort, either low or high, but this has very low impact, just forget about it. The question is always in these two. The one that is gonna really create the big impact is always investment of new technology. So research should be there, testing new technologies, changing the equipment, looking at the infrastructure, that makes sense. But it's clear that this is gonna take longer, right? We don't know how it's gonna be and when it's gonna happen. We have some estimates that in the following years, we may see really big investments and some of your organizations are already testing different things. In logistics, we are talking about, for instance, looking for alternative energies, particularly in transportation. But that is the quick wins, which in my view, very few companies are really looking at this, which is working with your current infrastructure, how you are actually operating what you already have to start squeezing for efficiencies, but looking at the sustainability dimension. There are big opportunities here that require less effort, I wouldn't say very little effort, but requires a lot of the things and capabilities we have built related to the data and the machine learning and also the infrastructure with all the computer power that we have now to in fact make better use. Now the question is how many are actually translating those goals, carbon target goals into the operational level or the tactical level? Like at this point, this is always the challenge. Usually sustainability is like that office that is in the closet, right? Trying to convince everybody to do projects and work with them, right? And by the way, make sure that you are also financially sustainable, whatever you're gonna do, otherwise we will not sponsor you for long. And they work trying to get with everybody. But how many of the organizations that have a sustainability department that in fact is putting indicators to all the operations and all the tactical levels. And then everybody that is part of the organization knows exactly how much their role is contributing to this goal. And that still remains to be seen. Now the way that we approach it, as I said from one side, we work a lot with data and different models to squeeze for efficiencies, right? So we want to make sure that we are making the best use of our assets. But on the other side, we also work with the last topic related to the consumer or the customer side. Because every time we involve the customer, it's possible to grow the supply capacity. And I will explain in a moment that example. So we'll use the transportation problem because we are at the center for transportation and logistics. Transportation is the sector that is being growing for the last decade. And it's expected to continue to grow for the next 10, 20 years. Doesn't matter if we are talking about US or Europe. This is the sector that even though we estimate innovations, this is gonna continue to grow. Now we know that in the transport mode share, trucks are the one that explain the majority of this growth. And this has to do with the last model operations, the omnichannel, the fast shipping. Like that activity is actually just increasing the density of the operations plus also the urbanization indicators. Now, I love to use this example just to illustrate how we look at the problem. So I have three examples. So if you have this truck and I ask you, you leave the distribution center, you need to deliver to four customers and then come back to the distribution center. Very simple problem. We call it the travel and assessment problem. What is the best route? You did the math already. What was it? Well, it depends. It's only allowed for the speaker. You're gonna say. So you need to commit. Yes, yes. Oh, I'm sorry. You said something different, right? Oh, you said diagonal. Correct. You see, I like that approach because if you go diagonal is longer. So usually when you create these secrets, you are trying to avoid the cross of the lines. It's like the Ghostbusters film, you remember? You are now my generation. It's probably the first time I say it and people laugh about it. When I will say to my students, they don't know what I'm talking about. Now, imagine that I give you now the load information and they say, well, actually it's fully loaded and you need to deliver nine tons, two tons, two tons and 10 tons of demand in each of the nodes and then come back. What is the best route? Well, the first is that if we go through that one, we are gonna deliver the heaviest demand last. So we are gonna be carrying more, creating much more inefficiency in the truck and then increasing the emissions. So usually it's better to deliver the heaviest first and then go in the route, have the cross, which implies increased distance by almost 20%. Now what if I give you the example of the topographic effect, which by the way matters much more than I knew. These two green nodes are 3,000 feet elevation. Aye, that's the case and I need to do the route like this and two crosses, more than 24%, fuel consumption decreases 22% and everybody's like this now. Because you are increasing the mileage, right? This is exactly the point and we did an interesting project on this to test the modeling. I wanted for sure to show at least one equation to make sure that everybody knew that I was at MIT. And then now we have a test we did in 25 cities, three different type of trucks, tested the differences. This is the main takeaway. In green logistics, shorter distance does not necessarily mean less CO2 emissions. So when you talk about this, stop saying let's reduce the mileage. No, no, no, it's not about reducing the mileage, it's being smart with the route you are doing. Okay, many times it's gonna be like that, but I just show you an example of four nodes. How many nodes you have? 80,000, 500,000? Like imagine the complexity and do you deliver it only in the Netherlands? Or you actually have topographic effects? So those things make a difference, right? And we look at these type of problems. Now, let me complete, I will take one minute more. Chris knew that I was gonna take a little bit longer, but I want to show also how we involve also consumers into this. And one of the tricks is if you are diligent in the way that you are measuring your footprint and you can actually allocate that to a particular purchase moment, then you could actually do something that we tested with a Mexican retailer called Coppola, right? We actually show how you could, at the moment of the purchase, inform the consumer about the implications of fast shipping specifically because you damage the consolidation operations. Now what we tested is what is the difference when you actually use trees versus kilograms of CO2? And the reality is overwhelming. When you use actually the information of CO2, those that are actually environmentally friendly, only 40% understand what you're talking about. In fact, when we say CO2 emissions, how many of us really understand what is actually the meaning of that? But if I actually translate that into how many trees I need to upset that amount that is released to the atmosphere, then people become more aware. And when we did this exercise with Coppola, it was more than 50% at the moment of the purchase. This is not survey, this is their decision of delaying the delivery. We actually built a model for them that improve the traditional transportation, which is typical for everybody. They use the route to minimize the distance. Many times during the day, you see the trucks coming to deliver. I will not mention any company, but any e-commerce company comes to my neighborhood at least three times a day. And now what we do is, okay, so let's test now a model in which I'm gonna deliver just to consolidate and I'm gonna postpone orders because now I have a time windows in days to deliver. And when we did this exercise, guess what, one month of pilot, we got reductions of 39%. I should have put the picture of the baby here. This is very cool. Now we actually wrote a paper on this that I would love to share. So we have many examples with UNICEF packaging with Dell, but I will just stop here. Let me just show my contact information. And thank you so much. I'm ready for the panel.