Doing some Earthly good: interview with David Correll
Supply chain sustainability is fast becoming a business imperative, but where do corporate eco-initiatives stand today? David Correll, lead author of MIT’s annual “State of Supply Chain Sustainability” report, shares his insights into what companies are doing to become better stewards of the planet and the obstacles they face.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
On April 22, we celebrate Earth Day,a worldwide event founded in 1970 to recognize the environmental movement’s achievements and demonstrate support for environmental protection. While the celebrations often focus on what we can do as individuals, there’s no question that corporations have a role to play too. And when it comes to corporate eco-initiatives, logistics and supply chain professionals often find themselves on the front lines, largely because they oversee the movement of goods worldwide, with all its potential for greenhouse gas emissions.
To learn more about corporate supply chain sustainability initiatives and the obstacles their leaders face, the Massachusetts Institute of Technology (MIT) launched a large-scale research project four years ago—research that eventually became the basis for the annual “State of Supply Chain Sustainability” report. Produced each year by the Council of Supply Chain Management Professionals (CSCMP) and the MIT Center for Transportation & Logistics (MIT CTL), the report examines how supply chain sustainability practices have evolved over the four-year period, how they are being implemented globally, and what that means for professionals, enterprises, industries, and the planet.
The project lead for this ambitious research effort is David Correll, Ph.D., a lecturer and research scientist at the MIT CTL who also serves as co-director of the MIT FreightLab. In addition to his research and administrative responsibilities, he teaches courses on designing integrated supply chains and the fundamentals of procurement.
Correll recently spoke with DC Velocity Group Editorial Director David Maloney about the latest supply chain sustainability research, its sometimes-surprising findings, and why he sees reason for hope.
Q: Earth Day is coming up, and, of course, you’ve been spending the past few years researching supply chain sustainability initiatives. This is also an election year, and ESG (environmental, social, and corporate governance) issues have become part of the political conversation. On top of that, 2023 was a rough year economically for logistics. Putting the economy and election together, have you seen pushback on ESG initiatives? Has sustainability taken a back seat?
A: That’s a great question. Speaking just to the data that we collect ourselves, I wouldn’t call it a back seat; I would call it a plateau. In our data from 2023, we did not see the growth in companies’ commitment to supply chain sustainability that we had seen in each of the previous years. There’s some evidence of a slowing of momentum when it comes to businesses’ commitment to sustainable supply chains. But I wouldn’t call it a back seat yet.
Q: What are some of the reasons for that loss of momentum?
A: This is one of our most interesting findings. When we ask people specifically about different things going on in the world that might impact their firm’s commitment to supply chain sustainability, the only factor that appeared to have a negative effect on that commitment was the prospect of economic recession. We may find this intuitive, but now we have some survey data to back up the notion that when people are worried about their downstream sales prospects, their commitment to policing their upstream for sustainability may wane.
Q: So the evidence suggests that less attention is being paid to sustainability because these programs are perceived as a cost. But are cost savings and sustainability always competing interests?
A: Gosh, that’s a great question. And I really think it’s a question that probably deserves a case-by-case analysis. On maybe the more obvious side of that argument, alternative energies and green technologies often have a much higher upfront cost [than their more traditional counterparts], and you just can’t walk away from that fact. On the other side of it, though, I think one could argue that they can act in tandem. For one thing, energy-efficiency efforts almost always save money if we can conserve the energy we’re using to perform the same operations. Then we are both saving money and reducing our environmental footprint.
The other part of it, though, is that a sustainability program can protect brand value in ways that I think are sometimes underappreciated. One way I like to think about it is as something akin to the TSA at the airport. We all put up with that because we hope that a crisis will be averted—one that we’ll never know about because we preempted it with our security clearance procedures.
I think the same thing can happen with supply chain sustainability and brand value. A brand [owner] doesn’t know what horrible, brand-diminishing threats could potentially lie hidden in its supply chain—things like disclosures of child labor or a brewing environmental catastrophe. Supply chain sustainability efforts are proactive efforts to keep that from ever happening. And it’s very hard sometimes to understand the cost benefit of forestalling something horrible and expensive from happening.
Q: When it comes to ESG initiatives, where is the pressure coming from? That is, who is pushing companies to make sustainability more of a priority?
A: What’s so interesting is that we have found that far and away the fastest-growing and strongest source of pressure is the investor community. By way of background for your readers, our survey goes out every year to about 3,000 people all over the world, and it goes out in several languages—English, Spanish, Portuguese, and Mandarin Chinese.
By analyzing all that data, we found that, of the 10 potential sources of pressure we measure, respondents consider investors to be the fastest-growing and the biggest source of pressure to make their supply chains more sustainable. And it’s probably helpful for your readers to know [exactly what other potential sources of pressure] investors beat out: They beat out government regulators, customers, and prospective employees. It really seems that the story of supply chain sustainability today is investor pressure.
Q: What are the biggest barriers companies encounter in their efforts to boost supply chain sustainability?
A: I’d say there are a couple of barriers that have emerged from our research so far, and we can put them into two buckets. In one bucket, I’d place what I call “the need for clear rules.” In this year’s report, we did a deep dive into the problem of tracking Scope 3 emissions [emissions resulting from assets not owned or controlled by the reporting organization]. Scope 3 is inherently difficult [to measure] because it’s emissions from the upstream and downstream activities of your vendors, not the emissions that result from processes inside your own firm. But it’s also unclear to many companies exactly how Scope 3 emissions should be calculated and who can book the wins when those Scope 3 emissions are reduced by a vendor or trading partner. So part of the barrier is just [a lack of] clear rules about how to tally the wins and losses.
In the other bucket, I would place the lack of a clear playbook for prioritizing social issues in supply chain sustainability efforts. One conversation that has stuck with me was with an executive who said that he wants to be sensitive to the increasing importance of social issues. He said the playbook is clear when it comes to energy—how to design a warehouse to reduce energy consumption or incorporate the use of green energy. But when we think about social issues, it’s not so clear to firms what their first, second, and third steps should be in order to become more socially sustainable.
Q: Let’s go back to Scope 3 emissions for a moment. These emissions are difficult to track and quantify, especially with different regulations in place around the world. How does someone navigate that?
A: The best answer I have right now is that they need partners who specialize in it—partners whose job is just thinking through the accounting and mathematics of measuring all of those emissions as things are moved around the world, with different regulatory regimes and different transportation technologies, and with multiple vendors using the same vessels to move things. I think we need more research, and everyone needs a partner to help them make those measurements, and then, even more importantly, to turn the results and findings into actionable steps so that reductions can be realized.
Q: With more Scope 3 reporting mandates set to take effect in various countries in the next few years, probably the sooner companies address those issues and find a partner, the better.
A: You know, that’s a great point. And it may speak to why we’re seeing investors as the fastest-growing and biggest source of pressure. One hypothesis is that the investors see those regulations coming down the pipeline too, and they want the companies they’ve invested in to be ready for that change.
Q: The most recent “State of Supply Chain Sustainability” report notes that crisis situations often allow companies to “reset” their supply chain sustainability programs and goals. Can you explain what that means?
A: Oh, thank you for picking up on that, because I think it’s one of our most counterintuitive and fascinating findings. And it’s also one we’ve seen now for multiple years in a row, so I feel really confident talking about this phenomenon.
The expectation is that a commitment to sustainability initiatives would suffer during a supply chain crisis. But, in fact, the opposite appears to be true. The research showed that respondent companies’ commitment to sustainability actually increases when their networks suffer disruptions.
For instance, we asked respondents specifically how the Covid-19 crisis has impacted their firm’s commitment to supply chain sustainability—we asked that for two years running and got almost the exact same result. If a respondent indicated that the Covid-19 crisis did impact their firm’s commitment to supply chain sustainability, the vast majority said that it had increased.
Similarly, we asked our European respondents what effect Russia’s invasion of Ukraine had had on their firms’ commitment to sustainability. And the majority of respondents said their sustainability commitment had increased as a result of this crisis.
So we had to start asking people why. How can this be? Because I really thought when we asked them about the Covid experience, they’d say they didn’t have time to think about sustainability while dealing with the myriad supply chain problems brought on by the pandemic.
What we actually heard back in our executive interviews was that the Covid-19 crisis “broke” inbound supply lines. There were factories they’d been sourcing from that they could no longer use. There were transportation vendors they couldn’t rely upon. That gave them the opportunity to go to their leadership to ask for the time and budget they needed to redraw their supply lines. And when they did the redesigns, they did it with sustainability in mind.
The same was true with the war in Ukraine and the introduction of trade sanctions. When firms were forced to redraw their supply lines in response to the crisis, they tended to increase their commitment to sustainability.
Q: So in a lot of ways, just being forced to revamp their supply chain networks gave them the opportunity to redesign them with sustainability in mind?
A: Yes, exactly. As one of the respondents said, “This gave me air cover to do the sustainability thing that I already knew I needed to do anyway.” In his case, he wanted to move to electric last-mile delivery vehicles—something that his company was thinking about and saw as a sort of “nice to have.” But there wasn’t an opportunity to ask for the time and budget to get that project done until the crisis gave him the air cover, if you will.
Q: You’ve done the “State of Supply Chain Sustainability” study for four years now. What trends have you seen emerge in that time?
A: One of the things that jumps out at me is the rise of the “social.” When we started this project, not everyone on the research team agreed that social issues—things like supplier equity and diversity or pay-for-trade and human rights—were even part of supply chain sustainability. But the research clearly shows that social aspects do matter. In fact, we’ve really seen strong growth among what we call the “social dimensions” of supply chain sustainability as an area of focus.
I didn’t realize how seriously firms were taking social issues as part of their sustainability portfolios before I saw the data. And that leads to my second observation: that sustainability is a moving target. We see different priorities rising and falling in importance over time.
So those would be my two big take-home points: that the issues are changing, and that social issues are rapidly growing in importance. And I think they’re here to stay.
Q: Is there anything else from your research you’d like to share?
A: I’d just like to share with your readers that, for me, Earth Day is a time to reflect on the health of our planet. And sometimes when we do that, I think we can easily find ourselves in a state of despair or state of concern that we’re not doing enough. I think that’s probably true. But it can also be very helpful to have something that makes you hopeful on Earth Day.
I wish everyone who reads the report could have the same experience I’ve had in preparing the report. It’s produced in cooperation with companies and students from around the world, and with our partners at CSCMP. All of these organizations are really, really smart and have really hard-working people, many of whom take time out to help us with this project for free. And to me, that really shows that my confidence is [justified]. There are a lot of problems, but there are also a lot of really smart, hard-working people out there who are committed to solving them.
Editor’s note: The 2023 “State of Supply Chain Sustainability” report is available for free at the CSCMP store (www.cscmp.org/store) and at MIT’s Supply Chain Sustainability Study home page (https://sscs.mit.edu/.)
Sometimes, all you need is the right partner to solve your logistics problems.
In 2021, global paint supplier Sherwin Williams faced driver and hazardous material (hazmat) capacity constraints: There simply weren’t enough hazmat drivers available in its fleet to maintain the company’s 90% fleet utilization rate expectations for key partner store deliveries while also meeting growing demand for service. Those challenges threatened to become even more acute in the future, as a competing paint supply company began to scale back its operations in the Pacific Northwest, leaving Sherwin Williams with an opportunity to fill the gap.
The paint supplier needed a logistics partner that could help it overcome the shortage of hazmat drivers while also helping to manage its West Coast trailer pools, out-of-region runs, and ad-hoc freight. It also needed a solution that would meet quarterly and annual fleet budgets.
SCALING UP
Enter ITS Logistics, a third-party logistics service provider (3PL) that offers supply chain solutions for drayage, network transportation, distribution, and fulfillment across North America. ITS proposed a combined owned-asset and asset-light approach that would provide Sherwin Williams with the equivalent of 21 additional drivers. The 3PL would leverage its carrier network to overcome the shortage of hazmat capacity while also certifying its own drivers via a three-month process. Further, ITS would help manage Sherwin Williams’ trailer pools and coordinate carriers, providing the paint company with a single point of contact for transportation.
The project would address cost concerns as well: “ITS Logistics aligned its solution with Sherwin Williams’ budgetary cadence and offered a quarterly business review to align on price structure, adding a level of transparency and trust to the relationship,” according to a case study the partners released earlier this year.
The companies soon sealed the deal and launched the program.
Not long after that, Sherwin Williams began to feel the effects of the anticipated challenges in the Pacific Northwest—but the company was prepared. When the competing paint supply company shuttered its operations, causing demand for Sherwin Williams’ products to spike, ITS injected a blend of owned trailers and carrier power to alleviate equipment challenges, cover all locations and regions, and help the paint supplier scale to meet volume.
CLOSING THE GAPS
The project has helped Sherwin Williams rapidly scale its capacity, meet fleet utilization requirements, manage trailer pools, coordinate carriers, and flex to meet spikes in regional demand.
And the results speak for themselves.
“ITS integrating themselves into our fleet was instrumental in helping increase our outbound volume by 18.4 million pounds [year over year] in the last seven months of 2023,” said Ted Taxon, regional transportation manager at Sherwin Williams, in the case study. “This equated to approximately 460 truckloads of extra freight, a large portion of which ITS [handled] on an ad-hoc basis with no operational constraints or quality issues.”
The partnership also helped Sherwin Williams maintain a 90% fleet utilization rate with big box retailers—an increase from less than 70% prior to the partnership’s launch.
Robots are revolutionizing factories, warehouses, and distribution centers (DCs) around the world, thanks largely to heavy investments in the technology between 2019 and 2021. And although investment has slowed since then, the long-term outlook calls for steady growth over the next four years. According to data from research and consulting firm Interact Analysis, revenues from shipments of industrial robots are forecast to grow nearly 4% per year, on average, between 2024 and 2028 (see Exhibit 1).
EXHIBIT 1: Market forecast for industrial robots - revenuesInteract Analysis
Material handling is among the top applications for all those robots, accounting for one-third of overall robot market revenues in 2023, according to the research. That puts warehouses and DCs on the cutting edge of robotic innovation, with projects that are helping companies reduce costs, optimize labor, and improve productivity throughout their facilities. Here’s a look at two recent projects that demonstrate the kinds of gains companies have achieved by investing in robotic equipment.
FASTER, MORE ACCURATE CYCLE COUNTS
When leaders at MSI Surfaces wanted to get a better handle on their vast inventory of flooring, countertops, tile, and hardscape materials, they turned to warehouse inventory drone provider Corvus Robotics. The seven-year-old company offers a warehouse drone system, called Corvus One, that can be installed and deployed quickly—in what MSI leaders describe as a “plug and play” process. Corvus Robotics’ drones are fully autonomous—they require no external infrastructure, such as beacons or stickers for positioning and navigation, and no human operators. Essentially, all you need is the drone and a landing pad, and you’re in business.
The drones use computer vision and generative AI (artificial intelligence) to “understand” their environment, flying autonomously in both very narrow aisles—passageways as narrow as 50 inches—and in very wide aisles. The Corvus One system relies on obstacle detection to operate safely in warehouses and uses barcode scanning technology to count inventory; the advanced system can read any barcode symbol in any orientation placed anywhere on the front of a carton or pallet.
The system was the perfect answer to the inventory challenges MSI was facing. Its annual physical inventory counts required two to four dedicated warehouse associates, who would manually scan inventory to determine the amount of stock on hand. The process was both time-consuming and error-prone, and often led to inaccuracies. And it created a chain reaction of issues and problems. Fulfillment speed is one example: Lost or misplaced inventory would delay customer deliveries, resulting in dissatisfaction, returns, and unmet expectations. Productivity was also an issue: Workers were often pulled from fulfillment tasks to locate material, slowing overall operations.
MSI Surfaces began using the Corvus One system in 2021, deploying a small number of drones for daily inventory counts at its 300,000-square-foot distribution center (DC) in Orange, California. It quickly scaled up, adding more drones in Orange and expanding the system to three other DCs: in Houston; Savannah, Georgia; and Edison, New Jersey. The company plans to add more drones to the existing sites and expand the system to some of its smaller DCs as well, according to Corvus Robotics spokesperson Andrew Burer.
Those expansion plans are based on solid results: MSI’s inventory accuracy was about 80% prior to the drone implementation, but it quickly jumped to the high 90s—ultimately reaching 99%—after the company initiated the daily drone counts, according to Burer.
“We actually had an incident early on where one of the forklift drivers ran into the landing pad, rendering it inoperable for about a week while the Corvus team fixed it,” Burer recalls. “When we restarted the system, we noticed MSI’s inventory accuracy had dropped down to the 80s. But after flights resumed, accuracy quickly improved back to near perfect.” He adds that such collisions are rare as Corvus mounts landing pads high off the floor to avoid impacts but that accidents can still happen.
Overall, the system has helped speed warehouse operations in two key ways: First, the accuracy improvement means that associates no longer waste time searching for missing material in the warehouse. And second, the associates who used to conduct the physical inventory counts have been reallocated to picking and replenishment—creating a more efficient, and optimized, workforce.
A SAFER, MORE EFFICIENT WAREHOUSE
Robot maker Boston Dynamics is well-known for its Stretch and Spot industrial robots, both of which are at work in warehouses and DCs around the world. Earlier this year, Stretch made its debut in Europe, teaming up with Spot at a fulfillment center run by German retail company Otto Group. The deployment marks the first time Stretch and Spot are being used together—in a partnership designed to improve Otto Group’s warehousing operations by increasing efficiency and making warehouse work safer and more attractive to workers.
The partnership is part of a two-year project in which Boston Dynamics will deploy dozens of its warehouse robots in Otto Group’s European DCs. The first location is a fulfillment site operated by Hermes, the company’s parcel delivery subsidiary, in Haldensleben, Germany—a facility that handles as many as 40,000 cartons of goods on peak days.
At the site, Stretch—which is a mobile case-handling robot—autonomously unloads ocean containers and trailers, using its advanced perception system to pick and place boxes onto a telescoping conveyor inside the container or trailer. Spot—a quadruped robot—helps with predictive maintenance by collecting thermal data and performing acoustic and visual detection tasks throughout the facility to reduce unplanned downtime and energy costs. One of Spot’s jobs is to detect air leaks in the facility’s warehouse automation systems; future duties may include conveyor vibration detection, according to leaders at Otto Group.
Both Stretch and Spot will help the Haldensleben facility run more efficiently, especially during fall peak season when volume increases and work intensifies. The addition of Stretch addresses safety and comfort issues as well: Trailer unloading—a process that entails repeatedly lifting and moving heavy boxes inside a trailer, which can be dark, dirty, cold, and/or hot, depending on the weather—tends to be unappealing to workers. Along with reducing the amount of labor required, automating these tasks will have the added benefit for European facilities of helping them comply with EU (European Union) regulations limiting the amount of time workers can spend in those conditions.
Essentially, the robots are making life easier on the warehouse floor and for the company at large.
“Stretch is going to have a ton of benefits for customers here in the EU,” Andrew Brueckner, of Boston Dynamics, said in a recent case study on the project.
The trucking industry faces a range of challenges these days, particularly when it comes to load planning—a resource-intensive task that often results in suboptimal decisions, unnecessary empty miles, late deliveries, and inefficient asset utilization. What’s more, delays in decision-making due to a lack of real-time insights can hinder operational efficiency, making cost management a constant struggle.
Truckload carrier Paper Transport Inc. (PTI) experienced this firsthand when the company sought to expand its over the-road (OTR), intermodal, and brokerage offerings to include dedicated fleet services for high-volume shippers—adding a layer of complexity to the business. The additional personnel required for such a move would be extremely costly, leading PTI to investigate technology solutions that could help close the gap.
Enter Freight Science and its intelligent decision-recommendation and automation platform.
PTI implemented Freight Science’s artificial intelligence (AI)-driven load planning optimization solution earlier this year, giving the carrier a high-tech advantage as it launched the new service.
“As PTI tried to diversify … we found that we needed a technological solution that would allow us to process [information] faster,” explains Jared Stedl, chief commercial officer for PTI, emphasizing the high volume of outbound shipments and unique freight characteristics of its targeted dedicated-fleet customers.
The Freight Science platform allowed PTI to apply its signature high-quality service to those needs, all while handling the daily challenges of managing drivers and navigating route disruptions.
STREAMLINING PROCESSES
Dedicated fleets face challenges that evolve from day to day and minute to minute, including truck breakdowns, drivers calling in sick, and rescheduled appointment times. PTI needed a tool that allowed for a real-time view of the fleet, ultimately enabling its team to adjust truck and driver allocation to meet those challenges.
The Freight Science solution filled the bill. The platform uses advanced analytics and algorithms to give carriers better visibility into operations while automating the decision-making process. By combining streaming data, a carrier’s transportation management system (TMS), machine learning, and decision science, the solution allows carriers to deploy their fleets more efficiently while accurately forecasting future needs, according to Freight Science.
In PTI’s case, Freight Science’s software integrates with the carrier’s TMS, real-time electronic logging device (ELD) data, and other external data, feeding an AI model that generates an optimized load plan for the planner.
“We’re an integrated data analytics company for trucking companies,” explains Matt Foster, Freight Science’s president and CEO. “We’re talking about AI.”
The benefits of the real-time data are difficult to overstate.
“We’ve been able to execute in the toughest of situations because we’ve got real, live data on how long each event is actually going to take and a system to aid and even automate the decision-making process,” says Chad Borley, PTI’s operations manager. “From what traffic patterns we are battling in the morning and evening with rush hour and things like that, to the impact of additional miles to a route, or even location-specific dwell times, it’s been a huge differentiator for us.”
REALIZING RESULTS
A case in point: the collapse of Baltimore’s Francis Scott Key Bridge in March. PTI was scheduled to go live with a new dedicated account in the area just days after the collapse, which would mean rerouting and the potential for longer transit times. Instead of recalculating based on assumptions or latent data, PTI was able to reroute freight based on real-time information and analytics to give the customer timely updates.
“With the bridge going out, that changed our ability to make as many turns a day as the customer would expect,” Stedl explains. “But one of the things Freight Science could do [was to] quickly [assess] how much of an impact that traffic would have [and] what the turns [would] be based on what’s happening on the ground.
“So we were able to go back to the customer and readjust expectations in a real way that made sense, using data. Now expectations can be reset¾we’re not asking for forgiveness when there’s no reason for it.”
The system’s advanced algorithms make load planning more cost-effective and scalable as well. The platform allows PTI to monitor trucks, trailers, and driver hours in real time, recommending additional loads with remaining driver hours that would otherwise be wasted.
And they’re doing it all with much less. Stedl says tasks that used to require five people and hours of work can now be accomplished by one person in mere minutes, improving productivity and profitability while reducing labor and operational costs.
Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.
Founded in 1980 and headquartered in Durham, U.K., Indigo Software provides software designed for mid-market organizations, giving users real-time visibility and management from the initial receipt of stock all the way through to final dispatch of the finished product. That enables organizations to optimize an array of warehouse operations including receiving, storage, picking, packing, and shipping, the firm says.
Specific sectors served by Indigo Software include the food and beverage, fashion and apparel, fast moving consumer goods, automotive, manufacturing, 3PL, chemicals, and wholesale / distribution verticals.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”