Sustainability in supply chains with Alexis Bateman, CTL Research Scientist and Director, MIT Sustainable Supply Chain Initiative

[MUSIC PLAYING] Narrator: Welcome to MIT Supply Chain Frontiers where we rediscover the future of global supply chain education, research, and innovation brought to you by the MIT Center for Transportation and Logistics. Every episode features center researchers and staff who welcome experts from the field for in-depth conversations about business, education, and beyond. 

Today, MIT CTL Editorial Director Ken Cottrill speaks with Alexis Bateman, research scientist and director of the MIT Sustainable Supply Chain Initiative. Take it away, Ken. 

KEN COTTRILL: Alexis, welcome. 

ALEXIS BATEMAN: Thanks for having me, Ken. 

KEN COTTRILL: Maybe talk a little bit about sustainable supply chains. 

ALEXIS BATEMAN: We recently in 2018 created sustainable supply chains to be an umbrella initiative that brings together sustainability research from across the center. So topics ranging from circular supply chains, reverse logistics, sustainable logistics, transparency, disclosure-- all the different kind of facets of supply chain sustainability of so much research. 

We're bringing that together to show, so the breadth of coverage. So I wear that hat a lot of the time. And I also work on our digital learning MicroMasters Credential Supply Chain Management, which is our approach to reaching as many supply chain professionals for free or low-cost supply chain education. 

KEN COTTRILL: Obviously a lot of experience in sustainability. What do you see at the moment is the main sort of issues that are really driving your research and driving your interest? 

ALEXIS BATEMAN: It's been an evolution from when I started this work. So I think that broadly, the last few years, and especially in 2019, sustainability is becoming front and center for supply chains. And that is for a myriad different reasons, whether that be the pressures of, for instance, China refusing to take plastics recycling from other countries. 

And so that has put pressure on supply chains to reduce their waste, and their plastics waste in particular. Certain headlines and certain changes in the global environment have put sustainability front and center. The climate strikes and focus on climate change as an impact with supply chains playing a key role as a contributor to greenhouse gas emissions has also put that on the agenda. 

Both supply chain executives added to the fact that, to a lesser extent, but still a growing number of consumers are asking for this, asking for more information about their products, asking for transparency so that they can know where their products came from, how they were produced, what impact they had. And so that pressure to act is really diffused across almost every industry and multiple different topics. 

So it has moved from sort of this side-- nice to have-- this kind of responsibility that companies do have. And many have been doing it for quite some time. But I think that it is really in the last year come to almost the core focus of most companies with a supply chain that is no longer-- it's a non-negotiable now. There needs to be some focus on it in the coming years. 

KEN COTTRILL: In that vein, it seems that companies are recognizing more and more that in terms of sustainability, supply chain is really playing a key role that if you are going to improve your sustainability performance, you have to look at supply chain. 

ALEXIS BATEMAN: Absolutely. So something we've seen, as we've seen, not only this come into the front and center for most corporate supply chains, we're seeing this evolutionary role of the supply chain professional and a supply chain executive increasingly owning sustainability, because they are so intertwined, because you really can't claim sustainability. You can't claim, really, full supply chain sustainably without marrying that with supply chain processes and practices. 

So this is really becoming core that instead of having this side sustainability department that they're being married to supply chain manufacturing sourcing really where that kind of strategic positioning is sitting and transitioning. So that has been occurring in the last couple of years. And I'm seeing that change how it's owned, how it's diffused through the supply chain that there is a more operational expertise, that there is more technical capabilities to drive that deeper into the supply chain. And so I think that that change is really making progress more significant and also making supply chain so core to what everything is in corporate sustainability. 

KEN COTTRILL: Right. So do you think that supply chain practitioners are ready for that new role, because the only responsibilities-- and in many ways-- is bringing them into contact with other disciplines as well. So do you think this things that the profession can do or practitioners can do to make it easier for them to take on those responsibilities? 

ALEXIS BATEMAN: Yes, absolutely. So are they ready? I think that there's emerging portion of supply chain professionals have already internalized sustainability as a key component of their work. So there is a group that have found this, as they're seeking out additional training-- additional expertise so that they can embed that in their day to day lives. 

But on the whole, I think that a lot of supply chain professionals don't feel ready to take that on as their day to day tasks. And so it's being driven externally and often sort of executive pressure to internalize sustainability. But then that's not really getting into the day-to-day supply chain professional's tasks. 

And so I think for that, there needs to be a new support system. There need to be corporate training to bring supply chain professionals, those additional expertise for accounting for environmental and social impact for how to work with suppliers to adopt these to really get that full expertise in addition to their existing supply chain capacities. 

I mean, in our own SCM program, we're not only offering more opportunities to learn about sustainability, but our incoming applicants and students are actually asking for it. So almost 20% of applicants cite sustainability as a key reason that they want to dive into supply chain. So we're seeing this from all angles that while there is not an absolute expertise at this time that they're seeking it out, that companies are offering that as an additional expertise. 

But I think it's still taking time to diffuse into what we're calling front line supply chain professionals that they're really touching the database. So it's coming, but it's not really as diffuse yet, as I think it's going to be down the line. 

KEN COTTRILL: Right, and that's interesting because that that you say that recruits, that students that you see are showing a lot more interest in sustainability. Just sort of flipping that a little bit, does that also imply that companies can be more attractive if they have high profile sustainability record if they're seen in the marketplace to be conscientious in that area? Do you think that attracts the kind of talent that MIT CTL trains was part of their supply chain programs? 

ALEXIS BATEMAN: Yes, absolutely. So we're seeing, as we've all seen for many years now, that there is high competition for good supply chain talent, right? So these skilled trained professionals that are entering the workforce, there's really quite a bit of competition for those professionals. And so both on the fact that now they're being skilled in more diverse ways, including sustainability. 

But then on the other side that companies need to be attracted to those professionals that are in high demand. And so what we're seeing is that those companies that do have a better reputation are more transparent, are more notably sustainable, are getting more interest from the professionals as applicants. And so, of course, the most famous case, Patagonia, has been public about the amount of applicants that they have on the whole for their size of their company. It's quite significant. 

They also have an extremely low employee turnover rate at 4%. As we know, Patagonia is a very transparent, very public about their sustainability efforts. So they're getting those professionals to, not only come at a higher rate, but stay overtime, because they want to work for trustworthy companies. They want to work for companies that are ethical. 

And so maybe it's not moving the needle in all cases. But when there's that differentiator between a company that is notably more authentic, more trustworthy relative to those that are not, those are getting the professionals to apply and stay at a higher rate. 

KEN COTTRILL: So let's shift a little bit more towards the kinds of sustainability issues that you think need to be paid more attention to. Certainly in terms of someone like MIT, where we have a big responsibility to make sure that the education we provide of those areas that companies wants to be covered. I'm seeing terms, like, for example, say, a supply chain a lot more now. Are you seeing, in general, the companies are just more interested in how to develop circular supply chains? 

ALEXIS BATEMAN: I think there's many topics that are coming top of mind. But given China's announcement and this increasing focus on just the amount of waste that we're generating, in particular in North American culture, I think that that is something that has come front and center in terms of supply chain capabilities and know how. 

And it's a vastly different way of thinking about the supply chain as opposed to being sort of having no more responsibility once your product reaches the customers hands that that there is now a take-back component that you're responsible for the end of life of that packaging and that product. And that's just not how supply chains were designed, nor how we were trained to think. 

So I think that both the educational component is changing. Offerings are being increased. And then once you enter into your position in the company that there are opportunities to think differently about that product and packaging once it hits a customer's hands that there are creative solutions to minimize waste and then also change the dialogue around that being waste and do some input for another product or process. 

And so I think this is something that has really come quite significantly into focus in the last couple of years because of some of the new announcements of how recycling is being accepted and understanding that domestic recycling systems are broken. And so they're not recycling and treating the portion of waste that we once thought. And there is not the value that we were hoping that some of these waste sources would turn into in terms of end of life processing and recycling. 

So recognizing that there's a lot of pressures leading up to this point. The imperative for specialized training and educational offerings is on top of mind so that we have supply chain professionals entering the market that know how to think differently about it. How then once they are in a corporate setting, they can think about them, bring that expertise. 

KEN COTTRILL: Right. We had a roundtable on circular supply chains fairly recently which I attended with you. What struck me about the roundtable was just how much companies appreciated getting together in that kind of a forum-- companies across different industrial sectors and how much they learn from each other. And that seems to be one of the areas that, perhaps, MIT can play out an important role in bringing companies together to learn from each other, because it's a massive undertaking, isn't it, to shift away from the traditional forward-looking supply chain to a circular supply. 

ALEXIS BATEMAN: Yeah, in our position at MITT CTL, and in my position as a research scientist, I'm so fortunate to speak with so many different supply chain professionals and executives that are dealing with these issues. So I get to be privy for the challenges and opportunities and innovations. But I think that value really needs to extend beyond talking to me, which, then, when we bring them all in the room that many companies can learn from each other in that precompetitive space. 

So that opportunity, sit down with companies of all sizes from all industries at all scopes of progress and sustainability, that open learning space is, it's nonreplaceable. What we seek, especially to do on sustainable supply chains that we can provide these venues that we're recognizing that not, only is there a lot of interest in this space, but there is a gap in know how. 

And so, of course, we can fuel the professionals and see the professionals that we're sending out with more expertise. But then how do we work within the existing environment? And what educational offerings can we do to allow and embed more information, more opportunities to share and get more know how out there. 

KEN COTTRILL: Right, so, perhaps, you could give us a little bit more of a sense so those sorts of gaps in the knowledge that you're talking about. I mean, I remember from the roundtable, for example, that one of the topics that came up time and time again was a lack of standardization, particularly in things, like materials. 

So when you're recycling materials because different products have different mixes of materials, it's sometimes really difficult to design to something programs that were efficient. And that's one issue. Can you maybe mention any other issues you think that really need to be addressed? 

ALEXIS BATEMAN: Many. Ha, so thinking one, about standardization and kind of that imperative is that the way supply chains and businesses have longed work is so that the product is the best for the consumer, which is really you're the customer and the consumer that you're creating a value, and you're serving a need. 

And that was sort of the end of the story, right? You create all your functions around that. But now we're adding in new layers of, do we need to take it back? Do we need to know where that products came from and how it's produced along the way? These new capacities need to be added in on top of sort of the ultimate objective of providing a service and a product at the end of the day. 

So I think that that bigger system's perspective, which you then need to look throughout the entire supply chain from product design to end of life and understand what are the gaps in information? What are the gaps and capacities that we don't actually have one visibility to or the know how or the right collaboration to enable that? And so scaling this out into sort of a systems perspective from the gaps in information, the gaps in cooperation, supplier and buyer collaboration, right? 

There's these key opportunities that by looking at what our original business imperative was to now what we need to add in, then you can really understand where the gaps in capacity lie. So I think that knowing what's coming down the line? What are the key pressures? Who you are as a business. What are you serving? And then thinking a little bit more broadly about how we can work those together can create some really innovative solutions. 

KEN COTTRILL: So another really substantial research project that you're involved in at the moment is at a joint study with them-- the Council for Supply Chain Management Professionals and that you're looking at sustainability. Maybe you could just tell us a little bit about why that study was launched and what you're researching. 

ALEXIS BATEMAN: Yes, in 2019, we initiated a new research project with Council of Supply Chain Management Professionals on the state of supply chain sustainability. The big reason behind that was seeing the change over time in supply chain sustainability. 

So in my time exploring this topic, I've seen the pressure and the imperative grow substantially-- went from being sort of this side cute thing that people wanted to add on to now really it is a fundamental objective of many companies that they know this is nonnegotiable, that this needs to be part of their mission, that needs to be part of how they are doing business. And so that that transition-- and I anecdotally could always speak to the fact that this was happening. 

But it didn't have the numbers to back that up. CSCMP with their engagement with industry professionals and with supply chain professionals have equally seen growth and interest from their side in terms of what the supply chain professional needs and wants. And so they equally wanted to see some of this transition over time. 

So we wanted, one, to start something that was annual to be able to track change over time in how companies are diffusing this into the supply chain. What role the supply chain put professional plays in this. What are key issues that the supply chain is facing? And what are the differences between industry? 

So for this project, we really wanted to deep dive into those topics but also really direct it towards the lay supply chain professional. So as many supply chain groups, we get into our little bubble of people that speak all the same language. I love to talk to other sustainability folks. But we know they already drink the Kool-Aid. 

That report is for them, but it's for the broad audience that everyone can really access the information-- understand how this is going to be impacting their work in the near future? What their peers are doing. And so making this sort of open and very accessible, reporting of what the state of was in 2019 and then going forward annually. 

So that was the key objective. We've collected three sources of data that we're going to triangulate to ultimately contribute those findings-- one of which was a very large scale survey that we sent out globally across industries to supply chain front line professionals about how they see supply chain sustainability. What role they play. What they see the future. 

We're now also talking to supply chain executives to get their insights and perspectives on how they're seeing it currently and in the future. And then we're also looking at disclosures and media and other content analysis to understand really what's in the public environment and what's in the news to see how that is reflecting within what corporate actions are. 

KEN COTTRILL: And it sounds like a fairly unique piece of research certainly in terms of how comprehensive it is. Is that fair to say that there's nothing else like it? 

ALEXIS BATEMAN: I don't think that there is. Of course, there's been deep dives into supply chain sustainability. But they've been from different angles, largely either from those that are already leaders in the space or purely from an executive point of view. Here, we really wanted to see the full range of perspectives-- the full range of adaption diffusion looking across the supply chain, really an end-to-end scope of all topics. 

And so then in that way, you get that bigger picture of supply chain sustainability at all levels of supply chain and really trying to create this bigger picture report using multiple sources of data that we're seeing a lot of relationships of why companies are doing what they're doing. What pressures they're receiving. What's coming down the line there so that we can have these findings that are quite robust that are usable by supply chain professionals. 

KEN COTTRILL: And I gather that you're going to be talking about the study at MIT CTL's forthcoming Crossroads Conference on April 28. Understanding Uncertain Futures is the theme of the conference. 

ALEXIS BATEMAN: There are uncertain futures. What can we know about the future to, at least, give some certainty? So knowing sustainability is going to be on top of mind. And while it is ambiguous to many, what are key things we can start thinking about to reduce that uncertainty as we go forward in 2020? 

KEN COTTRILL: Well great. Looking forward to that talk, Alexis. Thank you for your time-- much appreciated. 

ALEXIS BATEMAN: Thanks again. 

ARTHUR GRAU: All right, everyone. Thank you for listening. I hope you enjoyed this edition of MIT Supply Chain Frontiers. My name is Arthur Grau, communications officer for the center. I invite you to visit any time at ctl.mit.edu or search for MIT Supply Chain Frontiers on your favorite listening platform. Until next time. 

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