S03E07 - Planet - Avoid HIPPOs or: Evidence-Based Management

S03E07 - Planet - Avoid HIPPOs or: Evidence Based Management

Daniel

"Hello and welcome back to 'The Supply Chain Dialogues.' My name is Daniel Helmig, and I am joined again by my AI co-host, Aimee.

It's been quite a few months since we last connected, and during our break, we all have witnessed some profound changes—many of which underscore the urgency of our dialogue here.

If we reflect on the last months, we're reminded of nature's unpredictable power—now, more and more, it seems to be on steroids. From devastating floods that swept through communities to relentless wildfires that razed landscapes to hurricanes that left trails of destruction, these events have not just been stories on the news. They have been lived experiences for millions, reshaping lives, homes, and futures—and not for the better.

Like last year after the break, before we start diving into this episodes topic, let’s recall some of the weather-related catastrophes that have occurred since our previous episode, shall we.It is the reason why we moved the focus of the podcast from just optimizing supply chains, organizations, digital set-ups, but move towards finding ways to deal with the uncomfortable situation humanity is step by step sliding further into. I don’t know about you, but isn’t it frustrating, that we forget so quickly? Jeez, I even have issues remembering what I had for dinner 5 nights ago. So, some major events stood out because of their magnitude and the hardship they caused to individuals and the supply chains that support them.

Firstly, the unprecedented floods in South Asia displaced millions and disrupted supply chains on a massive scale. These waters did not just erase homes but also swept away the infrastructure we rely on for food and medicine. Less large in scale, but still devastating for the people locally, let’s remember the massive floods in Austria and Eastern Europe in the last weeks.

Just to get this into context: It is simple physics, called the 7% Rule: For each increase of 1°C (or approximately 1.8°F), the capacity of the air to hold water vapor increases by roughly 7%. This results from the exponential growth in saturation vapor pressure with temperature. Check it out; it is science. You can experiment in your own bathroom: when you turn on the heating and then the shower…look at the developing fog and the later need to clean all the bath surfaces due to condensation water everywhere.

Then there were the wildfires in Southern Europe, a stark reminder of how quickly things can escalate. The impact was not confined to burnt forests but extended to the smoke-filled air affecting health and agriculture, and livelihoods tied closely to seasonal yields wiped out in days. There are now as well people dying due to heat exposure in their vacation location, the latest in Greece and Spain. Taking a hike during your vacation was in the past; nothing to worry about (unless you went on a walk in Australia’s south with flip flops and got stung or bitten by the highly inhospitable wildlife they have)

In North America, just think what happened the other week in Florida and further up. The hurricane season was fierce. Buildings were toppled, and power grids were shattered, reminding us of our vulnerabilities. Yet, amidst this chaos, it's been heartening to see communities pull together, adapting supply chain strategies on the fly to continue providing essentials.

Across the globe, heat waves broke records, stressing energy supplies and highlighting gaps in our preparedness for such extremes. They showed us clearly that more than traditional approaches is required.

Lastly, I must mention the ongoing drought in parts of Africa. Its prolonged effect has led to food shortages and raised the cost of necessities, pushing humanitarian supply chains to their limits.

In the last few weeks, several devastating climate-related disasters occurred. Notably, in September 2024, severe flooding hit Central and Eastern Europe, affecting Austria, Poland, Czechia, and Romania. The flooding, driven by days of torrential rains, killed at least 23 people and caused extensive damage. Austria's Lower Austria region and parts of Vienna were heavily impacted, while floods also ravaged towns in Poland and Czechia, with homes, businesses, and public buildings submerged. The economic toll of this disaster is estimated to reach €3 billion in damages.

Additionally, Hurricane Helene recently struck parts of the Caribbean and the southern United States, claiming hundreds of lives. The hurricane devastated homes and infrastructure, exacerbating humanitarian crises in some regions These incidents reflect the increasing frequency and intensity of climate-related catastrophes.

Lets bring home the amount of damage based on hard facts. For this, take it away, AImee: 

Here are the top 10 climate-related catastrophes that occurred between June and September 2023, with their impacts: 

AIMEE

1. Storm Daniel (Libya, September): This Mediterranean cyclone caused catastrophic floods, especially in Libya, where the collapse of two dams led to thousands of deaths, marking one of the deadliest storms in Africa. The storm also impacted Greece, Bulgaria, and Türkiye

2. Wildfires in Canada and Hawaii (June-September): Record-breaking wildfires ravaged parts of Canada, displacing thousands and severely affecting air quality across North America. In Hawaii, wildfires devastated parts of Maui, with significant loss of life and damage to properties

3. Hurricane Otis (Mexico, October): Otis made landfall near Acapulco, Mexico, with unprecedented strength, attributed to rapid intensification fueled by abnormally warm waters. It caused extensive damage to the coastal city 

4. July Heatwaves (Southern Europe, USA, and China): Extreme heatwaves brought temperatures over 50°C to parts of the U.S., China, and Southern Europe. This led to heat-related fatalities, infrastructure strain, and severe agricultural impacts 

5. Mediterranean Marine Heatwaves (July-September): The Mediterranean experienced intense marine heatwaves, leading to widespread ecological damage, including threats to marine biodiversity and coral reefs

6. Antarctic Sea Ice Record Lows in July till September): Antarctic sea ice reached record-low extents during the Southern Hemisphere winter, exacerbating concerns about global ice melt and rising sea levels 

7. Cyclone Biparjoy  in India and Pakistan in June: This tropical cyclone caused heavy rains, flooding, and displacements across India and Pakistan, damaging agriculture and infrastructure 

8. Severe Floods in China in July to August: Torrential rains led to devastating floods in northern China, displacing millions and disrupting essential services 

9. Drought in the Horn of Africa, which is still ongoing: Prolonged drought conditions continued to ravage parts of Somalia, Kenya, and Ethiopia, causing severe food insecurity and displacing communities 

10. Monsoon Floods in India in July till August: Intense monsoon rains triggered floods and landslides, particularly in the northern states, leading to significant fatalities and infrastructural damage

Daniel

These events, each with unique challenges and impacts, tell a larger story about our interconnectedness and the ripple effects of these catastrophes across borders. 

While the academic and scientific community is clear on the man made impact on earths atmosphere due to the increase of GHG emissions, meaning it increases the temperature of our climate overall, we so far could not see the impact, since as homo sapiens we can react to weather, not to climate. Now the local weather lets us flee in shelters, loose our homes, starve etc. Even if we forget for a moment our main topic—supply chain—let's consider the broader implications of these increasingly brutal events, particularly on migration behaviour among affected citizens. Climate-related disasters often force people to relocate, leading to significant shifts in population patterns. 

AIMEE

Reports indicate that climate change could displace up to 1.2 billion people worldwide by 2050, igniting a new wave of migration that threatens to strain resources and social structures in host countries.

DANIEL

Unfortunately, this movement of displaced people has coincided with a rising tide of nationalism and populism in many democratic nations. Politicians in several countries have capitalized on immigration fears, using it as a rallying point for their campaigns. For example, the elections in nations like Hungary and Italy showcased right-wing parties succeeding by leveraging anti-immigration rhetoric and promises to strengthen national sovereignty. And in France, Italy, Poland, USA nationalistic, even fascist tendencies are on the rise, so far held at bay through often desperate moves of the other parties to prevent these people come to power. In this context I recommend two books: How Fascism Works by Jason Stanley and Nexus: A short overview of Information Networks by Yuval Noah Harari, the other of books such as Home Sapiens and Homo Deus. Both books help to understand the consequences we as societies will experience, the more external pressure through weather, migration and other man made phenomena will be felt on an individual level.

These electoral successes highlight a troubling trend: as migration flows increase due to climate-related events, some political leaders adopt divisive stances that foster intolerance and undermine the principles of compassion and global solidarity, catching the confused, ill-informed electorate-like story of the pipe piper in Hameln in Germany.

This disconnection and accommodating displaced populations pose multifaceted challenges for industries and governments, particularly in managing supply chains amid increasing uncertainties.

Given these experiences, we have to ask ourselves: Are we doing enough to anticipate these changes and adapt our systems accordingly? What more can be done through collaborative efforts across sectors?

(Soft music ebbs away)

Today's episode will discuss these questions and more, especially how companies and governments might change their ways to tackle such challenges preemptively. A concept central to this is 'Evidence-Based Management,' an insightful approach I'll revisit shortly. In coming episodes of this season we will take the academic and scientific portion of evidence based management, and give you insights that you can combine with the dimensions of internal knowledge, board knowledge, customer, and leadership knowledge - to reach better informed decisions.

So, let's use this dialogue as an opportunity to reflect, rethink, and reshape our immediate days. I'm glad you've joined us today.

Daniel

"With our context set by these recent events, it’s time to get  into the crux of our discussion today: the urgent need for transformative change within organisations and governments. These entities are the architects of our present and future landscapes, and their actions—or inactions—have far-reaching implications on our ability to withstand and bounce back from climate-related and other global challenges.

The scale and frequency of recent climate-related catastrophes have shown us that traditional approaches are no longer viable. We're at a crucial point where incremental fixes won’t suffice. What's required is a fundamental shift in how organisations operate and governments enact policies—a change toward resilience and sustainability being baked into the core of decision-making processes.

One essential resource that has informed my thinking is the book 'Evidence-Based Management' by Eric Barends and Denise M. Rousseau.

So, what is evidence-based management? At its core, it’s about integrating the best available evidence into the decisions we make in our organisations. Barends and Rousseau argue that relying on empirical research, organisational data, and practical expertise can significantly enhance our effectiveness as leaders.

[PAUSE FOR EFFECT]

One of the book's key themes is the importance of using evidence. The authors guide us on how to leverage various forms of evidence, from scientific studies to professional experiences and stakeholder perspectives. This helps us make informed decisions rather than relying solely on intuition or outdated practices.

The authors also emphasise critical thinking. It’s essential to assess the quality of the evidence at hand, distinguishing between high-quality information and information that might mislead.

Here, the concepts explained in the book “Nexus” are helpful. Harari differentiates between the naive and educated view on information. This also opened my eyes and let me stand there as rather naive regarding information. I adopted the general consent that information leads to truth, and more information should lead to more truth and wisdom. However, he points out that information does not necessarily lead to truth but to just a common script that leads to power—hence misinformation in the millions worldwide on the web. 

To implement Evidence-Based Management, Barends and Rousseau provide a decision-making framework to help us implement evidence-based practices effectively. They also discuss common barriers we might face when using evidence in our decisions and offer insights on overcoming them.

[PAUSE]

Lastly, the book highlights the significance of creating a culture within our organisations that prioritises evidence-based practices. It calls for continuous learning and adaptation based on reliable evidence, vital for personal growth and organisational success.

(Pause, allowing reflection)

In the next part of our podcast, we'll personalise these insights through a series of ten targeted questions and answers. This will provide practical guidance on how to implement these changes effectively.

AImee

"What are the key lessons learned from recent climate events concerning supply chains?"

Daniel

"That's a great place to start, as these events have taught us valuable lessons about our supply chains' resilience and adaptability.

The first key lesson is the stark vulnerability within global supply networks. The interconnectedness that drives efficiency also means disruption in one region can have cascading effects worldwide. For instance, when floods paralyse a critical transport hub, the ripple effects can delay production schedules and disrupt delivery timelines across continents.

Yet, these vulnerabilities also present ground for innovation and process changes. One opportunity lies in diversifying supply sources. Many companies have traditionally depended on a narrow base of suppliers to minimise costs. However, recent events underscore the importance of a diversified supplier network to mitigate risks and ensure continuity.

Another lesson is the need to employ advanced data analytics and real-time monitoring. By leveraging AI and IoT technologies, companies gain enhanced visibility over their supply chains, allowing them to anticipate disruptions and respond proactively. I go so far and say, that any company with a diverse supply chain with over 100 suppliers is foolish not to use modern available technology to monitor their supply base and anticipate potential issues. The days, where the CEO or CPO sits at the morning table to read about a flooding, and then asking his subordinates whether the company might be affected are so 2oth century. But as always, survival is optional. Sleep your sleep of comfort, until your competition eats your breakfast.

Moreover, recent climate events have highlighted the necessity for more sustainable practices. Integrating renewable energy sources, reducing waste, and investing in circular economy initiatives mitigate environmental impacts and build resilience against resource volatility. Now, here you have to think more about the impacts that a more resilient supply chain can have on you, since the benefits are indirect at best. Let me point out a few, leaving the fact out that you could be the hero at your families dinner table, if you can talk about how you personally make a difference. But the other benefits can be:

• long-term cost savings

• Enhanced brand image and reputation

• Compliance with regulations (less risk of penalties)

• Access to new product markets

• Access to governmental funding

• Access to or retention of capital sources/investors

• Increased revenue

• Better return on investment

• Overall improved resilience in competitiveness

Now, granted - these benefits do not magically appear. You have to have people working on them, often across departments - but isn’t that much easier than trying to expand in markets, come up and launch new products etc. You will have to do this anyway, but how much sweeter, if you do the right thing in sustainability and see some doh.

In essence, while the challenges posed by these climate events are huge, they also give us the opportunity to reimagine supply chain management, getting to systems that are not only efficient but also resilient and sustainable.

AImee

"How can companies integrate evidence-based management practices to improve their sustainability efforts?"

Daniel

"Integrating evidence-based management into sustainability efforts is about harnessing diverse perspectives and data sources to make informed decisions. Instead of relying solely on instincts or the opinion of the 'highest paid person in the room'—often called the HIPPO—companies should seek input from a wide range of stakeholders, including academia, customers, shareholders, organisational experts, and supervisory boards.

For instance, engaging with academia can provide companies access to the latest research and innovative approaches to sustainability challenges.We will put a spot light on this in our next podcasts, reviewing academic papers with hugh relevance to your businesses today.

Now,  actively consulting with customers offers insights into evolving preferences, ensuring that solutions are practical and market-responsive.

One of the former companies I worked for, had this strategy which cost them hundreds of millions of dollars. They believed, being manufacturing buffs, that customers would love to get their products quicker. So they updated their production processes, shaved everywhere, days, hours even minutes of the whole value chain process. When they after a few years implemented six sigma, they learned about the voice of the customer concept. So, they went out and asked open ended questions. And, low and behold, the customers wanted there product not quicker, but only precisely on the date that was promised. This was important because the customers needed to make room at least a day before so that they could utilize the new product. So, this global company wasted millions to answer a question, that was never posed. This is not the exception folks, it is normal ignorant management behaviour. They, based on a few conversations, or discussions with their friends and senior consulting buddies, believe they know what the customer wants. They are the HIPPOs we should not follow blindly, and even more important, not becoming one ourselves. Ask, learn, reflect on answers that come from each corner of your stakeholders.

Stakeholders include shareholders and supervisory boards. They are vital in aligning sustainability initiatives with broader strategic goals and ensuring they are financially sound and scalable. Internally, fostering a culture that values input from all organisational levels promotes a comprehensive understanding of the challenges and opportunities across the supply chain. Just asked yourself, how your employees regard the internal suggestion process, if you still have one. 90% of these processes, when they exist, are rubbish, because the employees based on experience, see that their proposals are not appreciated. In a company of 100 people, you have 100 extraordinary brains. Use them. Everyone will have their perspective on solutions, based on their specific view of the world and your business. Not utilising this resource, is simply stupid and arrogant on the management part.

By integrating these varied inputs, companies can develop robust, evidence-backed sustainability strategies that are resilient, adaptable, and aligned with stakeholder expectations."

AImee

"What role does technology play in modernising supply chains for resilience?"

Daniel

"Technology is a cornerstone of resilient supply chains in today’s volatile environment. At the forefront is digital transformation, which includes implementing advanced data analytics, AI, and cloud computing to enhance supply chain visibility and agility.

Emerging technologies such as the Internet of Things (IoT) facilitate real-time tracking of goods, giving companies immediate insights into inventory levels and transit conditions. This capability allows for rapid response to disruptions, such as rerouting shipments in extreme weather conditions.

Blockchain technology also plays a critical role by providing a transparent and immutable ledger of transactions. This not only helps trace the origins of products, ensure sustainability and ethical standards, build customer trust, and reduce fraud. I am still at a loss, why so few companies are able to make blockchain work in their value chain. Is the the incompetence of their IT, or the ignorance of the sales, supply chain leaders. Or the missing leadership on the management board level? Blockchain and IOT are wonderful enhancements to create transparency and valuable data, but you need to have the antennae for this in your organization to reap the benefits.

Automation and robotics have revolutionised logistics by streamlining processes and reducing human error. Warehouses employing automated guided vehicles and drones for inventory management are seeing increased efficiency and reduced downtime. Still for this you need people in your organisation who have a clue about what automation and robotics can do for you. It is not just about automated guided vehicles if you better use a forklift truck. It is seeing and knowing what the art of the possible is. Looking at academia and science journals gives you the ideas to say: this can work for us and is a benefit. If the cost-benefit analysis is negative, don’t do it. But at least do the analysis.

Since we are on analysis, predictive analytics allow companies to anticipate disruptions and demand fluctuations. This enables better planning and resource allocation, making supply chains more proactive rather than reactive. And this is no longer rocket science, this is stuff that is out there and being used by leaders in the field. I know of at least 5 software companies in this space that can do magic. Here, I use magic as defined by Arthur C. Clarke. He said: "Any sufficiently advanced technology is indistinguishable from magic." Many people in supply chains today do not understand what is possible today and still play with the old ERP tools, hoping for better solutions.

By integrating these technologies, companies can bolster their resilience to external shocks, drive efficiencies, and enhance flexibility, making their supply chains robust against future uncertainties.

AIMEE

"Can you give an example of a company successfully implementing these changes?"

Daniel

"Absolutely. Let's take a look at Unilever, a global leader in consumer goods. Unilever has been at the forefront of integrating sustainability into its business model through evidence-based management practices.

Several years ago, Unilever launched its Sustainable Living Plan, which set ambitious goals to improve health and well-being, reduce environmental impact, and enhance livelihoods. What sets them apart is their commitment to data-driven decision-making in achieving these targets.

For example, Unilever uses life cycle assessment tools to measure the environmental impact of their products from raw material sourcing to end-of-life disposal. These insights have allowed them to implement changes like reducing the carbon footprint of their supply chain and ensuring all their agricultural raw materials are sustainably sourced.

Moreover, Unilever harnesses technology—particularly data analytics and IoT—to optimize water usage in production facilities and reduce waste. They’ve also successfully cultivated partnerships with NGOs and governments to promote new innovations and share best practices.

This evidence-based and technology-driven approach has not only enhanced Unilever’s sustainability efforts but also improved operational efficiencies, demonstrating that eco-friendly practices and profitability can go hand in hand. Their story is a testament to how targeted, data-supported strategies can lead to significant achievements in sustainability."

AImee

"What are the common barriers companies face in adapting to these changes?"

Daniel

"While the potential benefits of integrating evidence-based sustainability practices are substantial, companies often encounter several barriers when attempting to implement these changes.

One of the primary barriers is resistance to change. This can arise from a deeply ingrained culture that clings to traditional methods or from individuals who are hesitant to embrace new approaches due to fear of the unknown or potential disruption to their roles. Lets be brutally open here: implementing an approach like this diminishes the power of the leadership team, if they defined power by making the decisions based on their opinions alone (like most management boards do). In addition, for many leaders in the organisation they believe they have enough to do by utilizing input from their own organisation, processes and systems. Going out there to collect information from all these different stakeholders sound like a lot of work and leads to delays.

In later podcasts I will talk how to operationalize a speed of light analysis of academic papers and science knowledge, so believe me: if you do it right, it is less work than you think and reduces the failure rate of your projects, since they are based on a much larger footing. Some of the most successful projects I implemented with my teams in my corporate lifetime, were based on a detailed review of what is out there, rather than just trusting my own little brain.

Another common challenge is the initial cost and complexity of adopting new technologies and practices. Although these changes can lead to long-term savings and efficiencies, upfront financial and resource investment can be a significant hurdle, particularly for smaller companies with limited capital. Here, divide and conquer: most solutions can be shared with other companies or institutions. You can as well work with Universities and associations, that have access to much more advanced tools that you can imagine. Help them by giving students and professors an opportunity to work in your real world, and they will reciprocate. You would be astonished, what a bunch of graduate students can dig up today for you, if they are properly motivated.

Data challenges also play a role. Companies may struggle to gather accurate, comprehensive data to inform decisions and track progress. In some cases, the need for more expertise in data analysis and management further complicates this barrier. But whether you like it or not, either you learn or you wither away. You need people that understand the new technologies, know how to use cloud based technology not just for storage, but data mining, insights and prediction. And yes, they will be younger than you think is possible - but this is the impact of massively changing knowledge in the digital space. ChatGPT was just announced November 30, 2022 - and many of you still use it and its even better siblings like a toy, rather than an incredible instrument for market dominance in your field.

To overcome these challenges, we will spend a podcast in this season on just this topic: how to do the change management of moving from the old fashioned leadership and decision style to an evidence based management process. And, if you google evidence based management, you will find a lot of stuff, of why it fails. I tell you it is just an issue of proper change management, and you are 1000% better at decisions and implementations than your competition.

AImee

"How can governments support industries in managing supply chain risks?"

Daniel

"Governments play a crucial role in creating an environment where industries can effectively manage supply chain risks. One of the primary ways they can assist is through building partnerships that foster collaboration betweenthe public and private sectors. These partnerships can facilitate sharing critical information, resources, and strategies to enhance supply chain resilience.

Moreover, governments can implement policies that support infrastructure development, such as improving transportation and communication networks to bolster supply chain efficiency and reliability. Policies that standardize risk assessment and management practices across sectors can also help synchronise efforts to mitigate supply chain disruptions.

Incentive programs offer another powerful tool. By providing tax credits or subsidies for investments in technology and infrastructure upgrades, governments can encourage companies to adopt more resilient practices. Additionally, supporting research and development in supply chain innovations can lead to breakthroughs that benefit industries collectively.

Regulatory frameworks that require or encourage sustainability also push industries toward more resilient practices by integrating environmental considerations into supply chain management.

Now, I hear you say, "This is all good and well," but look at the reality: many of the world's governments are neither democratically elected nor see the topics we just mentioned as their role. Even democratic governments spend more time and money fulfilling their pet peeves based on their ideological inclinations than working on making it easy for the industry and all of us to get to a sustainable future.

Based on lobby work by the respective industries and ideological blindness, they promote and subsidise old harmful carbon fuels (just look at the subsidies for coal and cerosin, in your countries - it is a shame). And then, if other countries with different patterns of governmental support, have a leg up, potential importer governments raise the flag of unfair state influence and ask for higher import taxes. It is a joke, since mainly our western governments just have to let go of subsidising backward looking industries and products and focus on innovation. If you subsidize agriculture for example, you disturb the market powers between farmers and the food processors and wholesalers. In effect, you do not subsidize the farmers, but the big box wholesalers, since they know that they can squeeze a bit more. Which then leads us to buy products, that make no real economic sense to produce. The market can not regulate itself, and billions of dollars or Euros are misused, instead of promoting e-mobility, renewable energy and storage, and helping to change buildings to be climate neutral. 

Governments should be the good guys who look out for us and future generations. They should also use evidence-based management rather than ideological stupidity to give us the few swim lanes that we need to not only let the markets do their thing. Do not get me wrong, markets are great, but when you have profit and the old shareholder value mentality (still believe that Friedman and people like Jack Welsh and all their disciples (i.e. CEOs of Boing) have seriously poisoned capitalism to get to the situation we have today). You need swim lanes from benign governmental players. A good example, not perfect but great, ist the EDB, the Economic Development Board in Singapore. They are state actors, and some of the smartest and longterm thinking people I ever had the chance to interact with. It is humbling to see them work and set their swimlanes. Were they always right? Hell no, but they have a much better track record than nearly all Asian governments, what am i saying: all governments.

Through proactive policies and collaborative initiatives, governments can significantly enhance industries' ability to withstand and quickly recover from various supply chain disruptions." And this does not mean, that the German Chancellor or Economy Minister, or the US American President invite for a day the leaders of specific industries to have an “Automobil” or “ semiconductor” talk. It means detailed, painstaking exchange on a working level between government / state and industry and academia - again evidence based management.

(Pause for transition)

AImee

"Question 7: In what ways can supply chains contribute positively to mitigating climate impacts?"

Daniel

Scope 3, the ugly duckling in the governmental and supragovernmental regulations, is responsible for 60-90% of any company's GHG emissions. But, instead of setting here the swim lanes, and letting companies clean up their supply chains based on the power of the market and the most powerful force in the business world: competition - they decided to create hundreds of regulations and laws that put companies on their Scope 1 and 2 into corsets, that you need a PHD nowadays to understand. Believe me, I am doing my doctorate on GHG emissions and supply chain redesign, and what we have in terms of overburdening regulations and guidelines is a disgrace. Even more, in each of the largest emitting countries, the measuring and reporting of Scope 3 is in its beginning. Taking the situation of climate and weather, the emergence of migration, and fascist tendencies that go hand in hand with an electorate that is scared and misinformed, I find this view criminal for the good of our children and grandchildren.

"Supply chains, when managed with an eye toward sustainability, can be influential contributors to mitigating climate impacts. One innovative practice involves optimising logistics to reduce carbon emissions. This can be achieved through route optimisation, utilizing more efficient modes of transportation, and transitioning to electric or alternative fuel vehicles.

We will spend a full podcast in this season of how to operationalize change in any supply chain to get to net zero by latest 2030. Yes you heard me right, as I said so many times in my podcasts, Scope 3 supply chains can be at net zero (without playing games of CO2 certificates etc) by 2030- just hardcore competition and market forces. And since they carry the bulk of the GHG emission weight of each company, I leave it up to you to see the benefit for your company and your descendents by yourself. 

(Brief pause)

AImee

"Question 8: How does consumer behaviour influence supply chain management today?"

Daniel

"Consumer behavior is increasingly influential, empowered by greater access to information and expectations for transparency and sustainability. Companies that actively seek consumer input, alongside insights from other stakeholders, are better positioned to adapt supply chain strategies that meet evolving demands.

Collecting feedback from consumers not only guides product development and service offerings but also shapes broader sustainability objectives. By integrating these consumer insights with data from other sources like academic research and shareholder input, companies can create a responsive supply chain that aligns with both market expectations and environmental responsibilities."

Now, while this sounds all great, let’s not forget that most of the customers of products sit not in Europe and USA, but in Asia, Africa, India and the rest of the world. These customers are, by no fault of their own, less educated and often can not afford the luxury of thinking about the sustainability of the product they buy. They may just enter the lower middle class, can afford some of the goods and services, that our grandparents could afford and buy 50-70 years ago - and they behave equally as our parents and grandparents did. Here their governments could help, but unfortunately many of the countries with the poorest people, as well have the most selfish and corrupt governments, where sustainability and our climate have no place on their agenda.

We will spend an episode in the next season, in January, discussing this in more detail, and I am sure that I will have a lot of irate comments after that one.

(Transition music signals the end of the segment)

AImee

"Question 9: What future trends should supply chain leaders be prepared for?"

Daniel

"As we look to the future, several trends reshape the landscape of supply chain management, requiring leaders to stay ahead of the curve. One significant trend we talked about is the rise of digitalization and smart technologies. Artificial intelligence, machine learning, and advanced predictive analytics will continue to revolutionize how supply chains operate, providing unprecedented insights and efficiencies. If you look at the map called: Modern Procurement Platform Stack from Dr. Elouise Epstein, Partner at Kearney, you get a feel what is out there. It is not a complete model, no model can be complete, but it is brilliant, if you look for technology in a supply chain that is new and fresh.

Global trade dynamics are also shifting, driven by geopolitical tensions, changes in trade policies, and regionalisation trends. Supply chain leaders must be agile, ready to adapt to new trade agreements and tariffs, and explore strategies to mitigate potential disruptions. Again this sound so smooth: But in reality? How many Chief Procurement Officers have an overview of the ongoing changes in the tariffs, customs and trade barriers of the goods they buy? They are blissfully unaware of changes in tariffs and taxations that can make imported goods 100% more expensive from one day to the next. Exception exist in areas such as steel and chemicals, but overall: what an opportunity with modern technology to grasp, manage and mitigate.

Sustainability will remain paramount, with stricter environmental regulations and consumer demand for eco-friendly practices influencing supply chain strategies. Leaders must continuously innovate to meet these standards and position sustainability at the core of their business models. And in those countries that have an electorate, the pressure to the governments will be huge, which will lead to step function changes, when the pressure is released in the selection of other parties. Only fascism will be the opium for the crowds and companies, since by default they will ignore science, as they always did. There is a reason why American polititians, and their buddies in democratic, but especially dictatorial states negate climate change, or COVID-19, or anything else that scares the electorate and is explained by science. They cultivate fears for those topics, that they can handle and control and manipulate: Climate change and epidemics are not on their menu.

Lastly, the workforce of the future will influence supply chains, with changing demographics and increased emphasis on diversity, equity, and inclusion. Leaders must foster adaptive and inclusive cultures to attract and retain top talent in a competitive landscape. Young people like to work for companies, that have a high say/do ratio when it comes to ESG topics - and I am so glad that they do. I was just happy to get a job 40 years ago, today the younger generation are in many aspects the adults, and the baby boomers are - well - the adolescent generation, living as if there would be no tomorrow. Well, maybe that is why we have the issues today…

By anticipating these trends, supply chain leaders can equip their organizations to navigate upcoming challenges and harness new opportunities successfully."

(Brief pause)

AImee

"Question 10: What steps can listeners take to influence or participate in these changes?"

Daniel

"Great question because active participation from all stakeholders is crucial in driving meaningful change. For professionals within the supply chain industry, staying informed and continuously educating themselves on best practices and emerging technologies is vital. Engage in professional networks and forums to share knowledge and experiences.

Professionals can also advocate for sustainability within their organizations by championing projects that reduce environmental impact and promote social responsibility. Proactively suggesting initiatives and collaborations can foster a culture of innovation and accountability.

Making informed choices is a powerful tool for citizens. Supporting companies that prioritise sustainable and ethical practices sends a clear message through market demand. Additionally, participating in community-based sustainability initiatives and advocating for policies that promote environmental and social welfare can amplify collective impact.

People can also engage in dialogues about supply chain issues, raising awareness and encouraging others to consider the broader implications of their consumption choices.

Ultimately, no matter how small, every action contributes to a larger movement toward more sustainable and resilient supply chains."

I often hear the the argument with my clients: what can we really do and does it matter when it is so easy to wait and see and let others take the lead. I always then talk about the concept of “cognitive dissonance.” Organizations with cognitive dissonance have a tendency to resist change,  create higher stress and anxiety in their employees, since they can see the difference between the messaging and the reality of the company, and finally the decision making. Here leadership tends to make decisions that reduces the dissonance, unfortunately often in the direction of financial, rather than sustainability goals. By focusing just on the good old metrics and KPIs, dissonance is reduced.

(Transition music begins, leading to the conclusion)

Conclusion:

As mentioned, we will peel the onion on some of the topics further in subsequent podcasts. Here I offer you the academic knowledge that I had to gather anyway as part of my doctorate (1’200 academic articles and counting), and make the bridge towards operationalizing what is known, and how to get it done in the business world.

Well, I hope you enjoy this episode of the supply chain dialogues.   Please subscribe on Apple, Spotify, YouTube, or any other central podcast platform if you do. And if you are a subscriber, tell someone who struggles with the implementation of their projects.   If you're interested in learning more about this or other topics that we covered, you can sign up for online or face-to-face training, which is available on our company website and soon on YouTube. You can book a chat with me to explore the art of the possible for your company. We always find something through seminars, coaching, dialogues, or complete projects. 

With that - stay safe, be bold and see you in two weeks. These are the supply chain dialogues produced and copyrighted by helmig advisory in 2024.