Smart Talks with IBM- The Future of Supply Chain: Building Sustainable and Transparent Businesses

of working, no matter the industry. Join hosts from your favorite Pushkin Industries podcasts as they use their expertise to deepen these conversations, and of course Malcolm Gladwell will guide you through the season as your host and provide his thoughts and analysis along the way. Look out for new episodes of Smart Talks with IBM on the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts,

and learn more at IBM dot com slash smart talks. Hello, Hello, Welcome to Smart Talks with IBM, a podcast from Pushkin Industries, HR Radio and IBM. I'm Malcolm Gabbo. This season, we're talking to new creators, the developers, data scientists, c t o s and other visionaries who are creatively applying technology in business to drive change. Channeling their knowledge and expertise, they're developing more creative and effective solutions, no matter the industry.

Our guest today is Sherry higinich at IBM. She's the global leader for Sustainability Services and offering leader for sustainable supply chain and circularity, but to her friends, she's better known as the supply chain Queen. Sherry's job is to help businesses design and build supply chains that are environmentally sustainable and socially equitable. She's helped guide strategy for Fortune five hundred companies and has won numerous top awards in

her industry. Sherry has worked with companies like Salesforce and Ups to shape thought leadership around supply chain, and she's also a major advocate for greater inclusion and diversity in her field. On today's show, why sustainability and supply chains is good for the planet and for profits, how technology can ethically reshape the way consumers source their goods, and what the supply chain crisis has revealed about the interdependence

of our societies. Sherry spoke with Tim Harford, host of the Pushkin podcast Cautionary Tales, and longtime columnists at the Financial Times, where he writes The Undercover Economist. In addition to publishing several books and economics, he's also a BBC Broadcaster with his show more or Less. Okay, let's get to the interview. Sherry, thanks so much for joining me. And I've been looking at your job titles. I've got.

I've got the official job title IBMS Global Sustainability Services Leader and Offering Leader for Sustainable Supply Chain, and I've got the unofficial job title, which is Supply Chain Queen, which I have to say I like a lot better. So what do you actually do well? The title that I'm most proud of his mother? Let me just start there um, And you know I I am very fortunate to wake up every morning and do what I love,

which is answering a fundamental question. What responsibility do you have to others and what impact are you making in the world that we share. So in my current role, I lead sustainability Services and Alliances globally for IBM Consulting. Let's just make the connection for me between sustainability, which I think I understand. It's like, you know, doing the right thing, looking after the planet, looking after people, and

supply chains, which I also think I understand. That's the thing that goes wrong when I don't get my kettlebells, when that ship gets stuck in the sewers canal, and everyone's complaining about them at the moment. But how how are the two connected. So sustainability and supply chains are interconnected in that you have a lot of companies making

commitments right now around decarbonization. Maybe you've heard of net zero journeys or science based target commitments, and when you double click that supply chains are actually the conduit to realizing a lot of the scope three emission reduction initiatives that companies are after right now. So it just just explain scope three for me. So scope three emissions or emissions that happen outside of your immediate control. So think about upstream in sourcing and procarement. Think about when a

consumer actually uses your product. So, for example, a lot of consumer goods, the impacts associated, especially the carbon impacts and the water impacts often live after they leave the retail establishment or your front doorstep by a car and I and I fill it with gas then and I

drive it around. Then you know, even if the car is made incredibly responsibly and the gasoline was was refined in the most efficient possible way, you know, I'm still bending gas right absolutely, And I think that this is the real human emergency that's tucked under a lot of the climate change conversation is how are you transforming the lives of people, helping them make better decisions. A lot

of that happens in a supply chain. I think supply chains have gotten a lot of attention, maybe for the wrong reasons lately, because you you don't have your favorite snack or your favorite thing at your fingertips on the shelves, and certainly with with the pandemic, how we buy and procure goods has changed quite a bit. But supply chains

that's where leak, it's real. That's where we we see things around responsible sourcing and a lot of the social inequities that can be addressed using a supply chain, fair living wage, making sure that you have a diverse workforce. So the cognitive diversity something that I evangelize it I be in how are we really shifting the type of people who are in the room building solutions to fundamentally

rethink the world right now? And this is going to sound like an ignoble question because you've just expressed these noble sentiments, But uh, sustainable supply chains good for business? Of course they are so there's always this business case for change, and I think there's a pragmatical lens. So having come from industry and supply chain for over over fifteen years, there's always the lean optimization and what that means is things like operational efficiency, looking at materials differently,

is there more value left? Is there more value on the table. So looking at lean and green projects and initiatives, A lot of those things have been historically tucked under supply chain. But when you say sustainable supply chain, to me, it feels very different. It's different because a lot of the optimization and efficiency gains, specifically in environmental stewardship, have

been consequential. They have not been intentional. Yeah, the fact that people are thinking about supply chains now I think for the wrong reasons as you as you mentioned because stuff's gone wrong. Um, I'm sure that's frustrating as a supply chain professional and a need to supply chain queen. But but I mean, is that is that an opportunity because because suddenly people notice that this is important, People notice that the society relies on supply chains, the economy

relies on supply chains. Do you think that over the next few years the supply chain sector will look back at this moment and say, actually that there is some good. Absolutely. I mean there's the reality that we will never return to where we were before, and that supply chains really power the world. They connect communities, they connect you know, this super global, hyperlocal frame of mind, and that it shows the relationship that businesses can't succeed in societies that

are failing. I think, um, there's a sense of renewed resiliency as well when you you have business operations or business as usual, but you you actually can't stop looking towards the future. And that for me, at least when when I will look back on this in ten years, I know that supply chains are right at the forefront of creating the type of adaptability to rethink a new world, to use sustainability and purpose is really an anchor to connect every person across the global network that each of

us participates in. To the pre COVID consumer, supply chains were truly out of sight and out of mind. It wasn't until baby formulas started disappearing from the shelves and we had to sign up for a six month waiting list just to buy a car that we realized how much we had taken for Granted, Sherry mentioned earlier, much of the environmental and efficiency gains and supply chain have

been consequential, not intentional. But now that disrupted supply chains are more visible than ever, we're forced to ask ourselves how can we improve them? How does technology govern the modern supply chain? What can businesses and consumers do to make supply chains more sustainable and operationally efficient than before? Let's listen. I'd also like to talk about computers, because I feel computerst I've got to be involved by. This is an IBM conversation. You work for IBM, and what

if computers? What has data? What has digitization got to do with supply chains? It's so it's so important because digital and supply chain, especially from where I said, it makes sustainability visible, actionable, and operational. So we can just take some of the supply chain obstacles that have emerged in the past two years throughout the pandemic. You know, a lot of executives have had to scramble to frankly

rebalance their supply chain operations. So you think about demand volatility, rebalancing workforces, reallocating production lines to other products, especially as ppe was manufactured, um all of the policies and procedures needed to communicate openly with customers and then also seeking alternative modes of transportation, logistics and others. Sir, this is data and digital is really at the heart of this. If you don't have the right technology, you're not able

to make smarter, more informed decisions. And a lot of this data, frankly, especially in supply chain organizations, it exists outside your four walls. And the pandemic is a perfect example of the sort of collaboration with technology that's essential to not only save lives, but to make better business and operational decisions. So I'm trying to picture this, So I just imagine I'm a kettle bell. Um. I don't know if this is a good example or not, but

imagine I'm a kettle bell. And I mean partly because I got a couple down here and party, because kettle bell seemed to be the quintessential thing that everyone was trying to get hold of in in the spring of and no one, no one could. So um, Okay, So

so there's a kettle bell. I'm a kettle bell. I've just been made in a foundry, just out a hundred miles out of shen Jen, and I'm going to have to be driven on a truck into the port of Shenngen, stuck on a boat across the Pacific, arrive at port of Los Angeles, and then be put on a truck. And I'm going to go to let's say, Las Vegas, because there's somebody in Las Vegas who wants this kettle bell.

And you know, there's a problem because supply chains are all messed up, and we're trying to make this whole thing more sustainable, and we're trying to use digital technology to just just talk me through how this process could work better, how it could be more efficient, how it could protect the planet more, how it could reduce volatility, what what's going on that might make this kind of

thing work better. So the first question you ask is why are you producing something across the ocean that's landing in Las Vegas. And I think they're part of the beauty of exponential technology right now, and modernization is that we have more information to inform decisions and make better decisions than what that means is in your kettle bell instance, you think about the footprint of that kettle bell it's a very long supply chain and there's a lot that

can happen. So shorter supply chains are typically happier, they have less risk, they have a lower carbon footprint. They also have more autonomy and agility, meaning there's a shorter distance and there's less disruption that's probable in that shorter supply chain. So you know, you you look at how are you sourcing. What's that sourcing decision? Is it lowest price? Yeah? Probably, but what's the total price? What's the total price of it?

And that includes a lot of the regulatory pressures around lowered carbon emissions and carbon taxation, cross border adjustment tax, so on and so forth. Also look at the supply network, like are you creating our shortage of materials or goods or inventory and other parts of your network as a result of fulfilling that cattle bell order from China to

Las Vegas? Is there a better alternative? Is there a decision that's smarter, that's you know, a local or domestic decision where you can maybe with an incremental cost, have a shorter distance to market to delivery, a lower footprint, and you have more control over what happens and a lot of those drivers of disruption like demands, supply logistics, workforce sustainability. You eliminate that risk by design all the way upstream in that very first decision point, where do

we source, where is it going? And what's the total cost of ownership for that cattle bell? And if we want these decisions to be made more responsibly, who ultimately is making them and what are the what are the challenges that we face, what are the obstacles to a more sustainable strategy? Is it? Is it cost? Is it ignorance?

Just a question what's getting in the way. It's such a big question, and it's a great question because I now I know this is a little provocative, but I think that consumers have more power than they than they know. They are the demand signal in a supply chain. It all starts with what you buy and why you buy it, and what I often find gets in the way. And you'll have a lot of folks who give you big, fancy long answers pontificating. It ultimately comes down to choice.

It comes down to and again this is a bit of a first world answer, but you have the ability to choose with your pocket what type of world and what type of brand you support. The thing that I find most talentien is if you knew and if there was a way that a company could convey that level of transparency, not everything, not every single data point, but just enough to give you context around your purchase, would

you make a different decision? And that is what sustainability and supply chain is in my opinion, that level of right level of transparency to help people make better, more informed, responsible decisions. And that's also where the divide lies. There's so much data. I think, Um, there's no lack of data. Frankly, a lot of it is is living in disparate silos.

And part of the work that I support, um, how can you be a great connector across all the different touchpoints to not only connect this data aggregated just for that first step of visibility, but then the sharing that's needed of great use cases the QR code enabled product label, so giving the consumer the ability to scan a code and see an app relevant sustainability metrics that would enable in theory, a better different decision where you could show

not necessarily what a carbon footprint is or metric tons of carbon. Most consumers don't understand that, but in this example, Hey, if you buy this product, you're saving forty trees from being cut down. You're contributing towards this brand, responsibly sourcing a product, and also evangelizing the information in a way where you can be part of that journey. There are tons of examples where customers want to be a part

of something much bigger than themselves. Employees as well. So I think, you know, we've talked a lot about consumers being the demand signal, and that's really where it starts. But then I think that this is the power in the momentum, the paradigm shift that we're seeing where sustainability and supply chain absolutely matter. I love this idea that as a consumer, I can just put out my phone and scan the QR code and I can get I can get as much of as little the data as

I want. I can get I can get the quick summary, or if I'm a real nerd about something, and some people are very passionate, they really want the details. I've got a friend. Every time we go to a restaurant, he's always asking about the supply of the fish. He's super interested in sustainable fishing. It's just what's just what he does you know, we've all got our interests, So I love this idea that that these codes could just

empower us. It's you know, it's clear that that's a possibility now that the risk of digging a little deeper into more technical details. You mentioned this problem with data silos. To me through exactly how that problem manifests itself and what solutions are being explored. So historically, I think when you talk about competitive advantage, people have been able to operate in a black box, especially with supply chain data.

A lot of the data around sourcing, logistics, providers, manufacturers, all of these things were leveraged together for competitive advantage that they didn't want to share this this data the strategy across their ecosystem. From what we've seen throughout the pandemic, you are probably more profitable, more agile, and successful in understanding where you absolutely have to share this data. Um

this is this is equally true for sustainability data. So I think the paradigm shift is now in order two decarbonize our world, create the type of meaningful change biodiversity, restoration, ocean health, making sure that our forests are healthy. All of this requires cooperation now at scale. So when you talk about technology. I mentioned before that especially with digital and modernization and supply chain, it makes it visible so

everyone can see a source of the truth. So specifically at IBM, we talk a lot about something called an intelligent workflow, and this is where you can use technology like blockchain, like AI, like twinning, like quantum to bring all of these stakeholders upstream and sourcing and procarement all the way downstream to the consumer. Even so, take that QR code that you scant at the shelf. Consumer can look in their at their phone and see the journey

of that product. They can credibly see where it was sourced. There's even the the functionality to thank their farmer. So maybe you're scanning a bag of coffee beans where you can thank your farmer in act identify the source community. When have we ever been able in a source to pay intelligent workflow connect the first kilometer of a supply chain with the last smile all the way to the

retail shelf. So I think that these are the types of possibilities and opportunities that are enabled with technology, creativity, cognitive diversity, and fundamentally rethinking the way that we've done things right now. Nine of materials in the world actually our circular which means ninety one percent of the goods that we use that we consume end up in a landfill or are wasted in some way, shape or form,

and that is absolutely unsustainable. We are on a path when we look at our landfills and we look at just the management of waste and oceans and waterways. We cannot continue to take make and waste or throw away goods that we produces. As a species. We're becoming more and more aware of the societal ripple effects that result from our consumption. Much of Sherry's job is to think about how we will live and consume in the future and how we can affect change today. There's a human

element to her work. Timm as Sherry how she collaborates with the many humans who are embedded in our supply chains to get them on board but changing the status quo and what part creativity plays in her work. This the whole season of the Smart Talks podcast. It's focused on creativity and business. Are you a creative person? Of course? You know what's interesting about my career path. I actually I started as as an entertainer, as a singer. A lot of people don't know that. So I was a

musician songwriter for many years. Um, but yeah, I I there's something about creativity. Um, it's like the human soul on fire. And when we think about you know, everything that we're living through right now, we need people who can be creative and think from different perspectives to redesign this world and to redesign business and really steer us into a new future. Now now, now, now, you might not agree with me, but supply chain and music are

absolutely connected and they're very similar. And I'll show you why. In supply chain, you always start with customer centricity or voice of the customer. How are you meeting their their needs, their wants, how are you fulfilling the demand. It's no different than being on stage and singing or writing a song. Think about listening, tempo, cadence and pulse, emoting tone, all of those things that orchestration. It's just like music. It's

just like supply chain. I love it. So, I mean you you've conveyed this idea of the creativity and of the listening and of the tempo. Can you give me a specific example of of a time that you've you've helped a client who's come to you and said, look, I've got to make the supply chain more sustainable, or maybe the client didn't realize that they had to make supply chain more sustainable and you convinced them of it, but just just talk me through a particular client project

or client relationship. So, yeah, looking at a transparent supply chain in this example, UM, this organization, oh, is a bit immature in the space, so looking at how you UM encourage healthy snacking. And they wanted to use data differently. A lot of the data that they had was very

much disconnected from the way work gets done. But then they also wanted to bring the customer along with them, which was a scary proposition because I think one thing that came out of that engagement is they weren't as mature as some of their competitors. And they said, if we voluntarily disclose some of the risks that we know, we want to dress but we have to start somewhere taking that first honest step, will it harm our brand?

And it was a really interesting way of looking at it because as a consumer who actually buys their products, I thought, Wow, they're starting from a place of wanting to be honest and wanting to lean in, and we have to acknowledge that a lot of brands are on this journey and we are going to see things that we cannot unsee. Um and very much so. The other

thing was not knowing how to get started. And in order to give people that level of transparency in this customer example, they needed the nitty gritty, and the nitty gritty was very ditty, and it was a lot of assumptions cobbled together, and I actually had to convince them that it was a great starting point and and almost take them from feeling very vulnerable to feeling very confident. And again, um, I saw services in technology and and it was it was a great learning moment, frankly, because

technology doesn't necessarily solve that. Um it's very much you know, connecting that human experience. And that is where specifically, in this example, the client had a vision for a transparent supply chain, but didn't know how to piece together a lot of great ideas where they could actually fund their transformation over a five year period. Was a billion dollar business case, a lot of really cool ideas tucked under it, but it was what's the sequence of steps and why

how do we prioritize resources, funding transforming work. So a lot of the work was automated, you know, thinking about the future of work and automation, how do you repurpose this analysts time for example two more value add time. So all of that to say it was a It was a great learning experience, um for me and also for the brand that I serve, and that we both got to learn together and do something that really changed everything for them. It sounds studies work really masses to it?

Does it does? It's why I get up every morning. I had this moment where it clicked, and it was about seven years ago. I have three kids, So my oldest just turned thirteen, and my my oldest shame my daughter Aris eight and my youngest is seven. And it was when he was born, UM that I just sat back and thought, you know, with the climate emergency, Um, it was it was right around what am I doing? Like,

what am I doing to change this? And you start to think about, you know, when they're eighteen and God knows what the world will look like, then what did you do? What was your response? And being in supply chain and at the time starting to dabble in sustainability, I saw those interconnections, and I saw a way marrying supply chain sustainability and technology to really make a difference and transforms people's people's lives, and it's good for business

and good for the planet. And I think it was all of that coming together and clicking for me where I just said, this is what I'm gonna do. And it's just been an incredible feeling and nothing can replicate this. My kids are proud of me. UM. I love my team. I would choose them even if I wasn't here, I

would find them in the universe. I always tell them so that that's really what it's about for me, is is making a better a better world for others, for my kids, for their kids, um, And that's what matters most. Just tell me, look twenty years into the future, and we know the climate isn't going to get any better.

We know we've got a real problem there and it's for the foreseeable future that will get worse even if we were able to put some real solutions in place, but supply chains themselves in twenty years time, what would you hope sustainable supply chains might look like. I definitely want community resilience and hyperlocalism to be a driving force for supply chain transformation, meaning that so a big brand like do you have community permission to open your doors there?

How do you preserve that community? How do you ensure that basic needs are being met? That is so critical and important. I mentioned before that businesses can't succeed in societies that are failing, and I think that that tie between profit with purpose and societal impact it's coming to the forefront now. When I think about a supply chain

in twenty years, you think about community resilience. You think about you know, how am I enabling others who have been marginalized or traditionally left behind to have access to healthcare, to have access to education and upskilling. I think all of these things, that's what I would want most And in terms of like how work actually gets done and how we transform our thinking, it's that we have shorter supply chains and that we we think about the impacts holistically.

The total cost of ownership for a brand, for a phone, for a mouse, for a can of sparkling water, what's the total costs of this really isn't necessarily price, you know, there are other things that go into that, and I think that if we really understood the impact that we have on the world, how we contribute to climate variation and climate change. I I want to believe and hope that we would make different decisions. Sher, it's been such pleasure talking to you. Thank you so much. Thank you, Tim,

it's been a pleasure. When we think of supply chains, we typically picture cargo ships or far away factory belts, maybe a map of the world with a string of connected dots running from Shenzen to Las Vegas. But what Sherry does so well is highlight the impact these often invisible systems have on our daily lives. We all want supply chains that are ethical, environmentally responsible, and integrated with local communities. It's good for business, good for the planet,

and good for the consumer. The pandemic gave us a chance to begin the paradigm shift in supply chain thinking that Cherry talked about. Now there's an opportunity to put these ideas into action in our day to day choices, in our businesses and in our communities. The next time we're at a grocery store and can't find our favorite snack, let's take a moment to remember that. On the next episode of Smart Talks with IBM how AI powered technology can help us combat the human biases that result in

discriminatory hiring practices. We talked with Angela Hood, founder and CEO of This Way Global. Smart Talks with IBM is produced by Matt Romano, David jaw, Royston Deserve, and Edith Rousselo with Jacob Goldstein. We're edited by Sophie Crane. Our engineers are Jason Gambrel, Sarah Brugare and Ben Holliday. Theme song by Grandmasco. Special thanks to Carlly Magliore, Andy Kelly, Kathy Callaghan and the eight Bar and IBM teams, as

well as the Pushkin marketing team. Smart Talks with IBM is a production of Pushkin Industries and i Heart Media. To find more Pushkin podcasts, listen on the i Heart Radio app, Apple Podcasts, or wherever you listen to podcasts. I'm Malcolm Glaboell. This is a paid advertisement from IBM.