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All Business. No Boundaries. The DHL Supply Chain Podcast
Welcome to All Business. No Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. This is a place for in-depth discussions on the supply chain challenges keeping you up at night. We’re breaking beyond the boundaries that are limiting your supply chain.
All Business. No Boundaries. The DHL Supply Chain Podcast
From Sustainability to Diversity and Inclusion: What to Expect for Supply Chains in 2023
In our newest podcast episode, we sit down to discuss three supply chain trends to watch out for in 2023: sustainability, innovation, and diversity & inclusion. Our special guest for this episode is Scott Sureddin, CEO, DHL Supply Chain, North America.
Welcome to All Business, no Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. I'm your host, will Haywood. This is a place for in-depth discussions on the supply chain, challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. Today's episode is from sustainability to diversity and inclusion, what to Expect for supply chains in 2023. Our guest is Scott Sarin, c e o, DHL Supply Chain North America. Let's dive in. Okay, Scott, thanks for being with us again. It's hard to believe it was two years since you were last on the podcast and a lot has happened in that time in our industry overall and the world. I want to talk about 2023 for most of our discussion, but I'd be interested in sort of your recap on how 2022 went in the market overall with DHL in North America.
Speaker 2:Great. Well thanks for having me back. Two years has been a long<laugh>. Maybe it was my performance last time,
Speaker 1:But<laugh>, well, it went fast.<laugh>.
Speaker 2:Yeah, I would say, you know, it was a really good year for us. You know, there was a lot of challenges I think, across the industry when it comes to not only labor shortages but material supplies. You know, those things are really difficult, but I would say that, you know, what's our scale and being the largest contract logistics player in North America and globally definitely helped. You know, our scale does help. And we really had a strong year. We had double digit growth on top line. You know, once again, that diverse portfolio really helps us being big in the growth of e-commerce business and the staples of the normal retail business, the consumer business, the automotive and manufacturing businesses were really strong. You know, we did a good job moving with the market on labor. That's probably the biggest challenge everyone had was around finding enough labor and we made sure that we put programs in place to, to attract the best talent and, and that was around whether it was wage increases and or benefits or personal time off and altering those kind of programs. So I'm pretty pleased with, you know, how we're coming out of 2022. I guess another really good stat to provide on that is beside double digit growth is, you know, just for our peak season in the fourth quarter, you know, we'll add 12,000 seasonal associates just to handle the volume.
Speaker 1:And that's on a base of what's our kind of steady state associate count.
Speaker 2:We're right around 50,000 associates across North America.
Speaker 1:Okay. Yeah, so that's a pretty good flex up. The other thing is, you know, all the news sources are listing out economic headwinds of various types Going into next year, what are you seeing in the business in the, you know, fourth quarter peak season? And then are you, you know, how worried are you about next year and how are you thinking about our business as we enter into 2023?
Speaker 2:Well, I would say fourth quarter is showing to be just as strong as it was last year. So we're seeing volume at same level or higher than last year. And I think that's really because of the inventory build. So, you know, we think how we have the opposite issue either before there was no inventory available. Now we have inventory levels higher than we've ever had before. So supply chains are catching up. We have inventory and so people have to move it. Our customers have to move it because the cost of capital. So there's some discounting going on and volumes moving out. So, you know, I feel really good about the fourth quarter of this year. Uh, finishing strong. You know, I'm with you and I don't think anyone can predict exactly what happens next year, but I think first quarter if we push all this inventory out, we'll see what happens with all the inflation and people's discretionary income. But you know, I'm not seeing a major dip and, and once again, it's easier for us to say that cuz we're very diversified. We're in so many different sectors and subcategories that yes, we will have some areas that probably will dip down and there'll be others that move up. We should still see good growth going into next year.
Speaker 1:Good, good. So onto next year, you know, we're looking to tap into some of the more significant industry trends. Uh, and we're gonna be speaking about'em both as a company and as an industry at Manifest in Las Vegas in late January. But there are are three that I'd really like to get your point of view on that seem to be kind of dominating the conversations, those being sustainability, innovation and diversity and inclusion. So starting with sustainability, how's d Hhl looking at sustainability being a sustainable provider? How does it play out in North America versus rest of the world? What kinds of things do you have going on there?
Speaker 2:Well, I would definitely say, you know, d hhl globally, this is an initiative. It is something that's part of our strategy that, uh, we're serious about. I would say the North America is a little bit behind Europe, but that's really not due to selective companies. It's more about the infrastructure. North America, Europe is further ahead. A lot of those reasons. Europe's further ahead is cause they had to be, I mean, electricity is five to 10 times cheaper here. Gas is cheaper here. You know, so all of those things that were, that required, really we didn't, our government didn't put the money into it as soon as Europe did. But, uh, we are on the path. I would say that our solutions are, are getting better. You know, when you talk about, let's just say your warehousing, your buildings, you know, wind, solar, and hydro is the future of, uh, sustainability in this, not only for commercial but also residential, but the infrastructure really isn't there yet. There's really no selling back to a grid at this point. So when you're putting in wind, solar, or hydro into a facility, there just really is no payback and there's no place to put that extra electricity you're generating back into something. So, you know, I think the best thing we're doing right now is we're doing a lot of the ires where we're purchasing wrecks that are, that are investing in the companies that are, are building out our infrastructure of wind, solar, and hydro. So that's really the warehouse side I would see on the transportation side. You know, once again, progress is there, but it's slow. I mean, I guess an example would be with Tesla electric vehicles. We, we put a deposit down in 2017 and we're not gonna see our first one. And until 2024, you know, we are going for shorter miles, electric vehicles are there. So all of our yard trucks and things of that sort are either converted or planned to be converted to all electric vehicles. But I would still say the solution long term is going to be hydrogen and it's just not there yet, or not ready. But we will be seeing electric and compressed natural gas the next several years, which we're investing in that over the next seven years. We're investing about four to 5 million a year just in electric and compressed natural grass trucks. And then I truly believe that hydrogen will bypass all of this and that will be the solution of the future.
Speaker 1:Yeah, it's a complicated landscape. We had Stephan Linsky on on one or two episodes ago, and he did a nice job of kind of breaking down, you know, where the biggest impact can be made facility versus transport, and then some of the challenges that you just summarized on the transport side from a supply standpoint. So, okay, innovation, which is I think, you know, there's an innovation component associated with the sustainability agenda. But then, then more broadly, I know this is something that DHL's been focused on for some number of years. Where do things sit today and where do you think things go next?
Speaker 2:Well, the great thing is there's a lot of great solutions out there now, and I would say that, you know, we partner with all kinds of suppliers on this. I always say we're the best integrators, so we're not, you know, single focused or single source to a, a technology because some run fast and stop. And then others maybe start off a little slower and end up with a better solution. So we continue to partner, invest in different technologies. I would say the return on investment is definitely there. And so we're getting more and more solutions. And I would also say that it's the way people wanna work now. So a lot of your workforce is used to, you know, iPhones, iPads, technology automation, and it makes it a better workplace. So I'm pretty excited about, we'll continue to evolve. I believe we're close to 90% of our facilities have some sort of robotics or automation going on in the facilities. And then we'll continue to accelerate as we get better solutions that work well with our associates. So more collaborative robotics.
Speaker 1:Right. And how do customers see this? Do you see a lot of appetite from them in these types of solutions? Or is this something that you feel like the business is pushing into the market? Well,
Speaker 2:Absolutely. I think for a couple reasons. For one, there's a labor shortage. So everybody knows that we've struggled to get labor across any industry right now. So this is definitely something that helps us be more consistent on handling volume. And for two, the ROIs there now, you know, it's definitely more cost effective. And so our customers always like solutions to give them consistent performance and a more cost effective solution.
Speaker 1:And is it that the robots are cheaper or has there been a different approach to commercializing the solutions?
Speaker 2:Well, I think it's kind of all the above. I mean, yes, the cost has come down on the technology, but also the use of the technology. So the integration into your overall, your overall operation. So you know, how you integrate that into deploying into your order drops and, and how we use them inter operations have become core to what we do.
Speaker 1:Got it. And I know one of our leading solutions has been around Locus and the, uh, robots to person kind of solution, uh, in, in more of a each pick or, you know, single item setup. What about case pick and pallet pick automation? Is there a similar kind of solution in front of us for those formats or profiles?
Speaker 2:Yeah, those are probably the two most exciting things that are progressing. So I would say the autonomous forklift that can put away and pick full pallets, which we are using now, will continue to accelerate those. And then the other piece that's probably the, you know, the thing I'm most excited about is the case pick. So when we have robots picking cases, especially when you're talking, you know, heavy, repetitive, which is really hard on our associates, very manual. That is a technology that we are investing in, uh, actually with Boston Dynamics, we are making a big investment with them to accelerate this type of technology. And I see that we will be piloting something we're hoping by 2024 on this.
Speaker 1:And, and do I have it right that you started out as a case picker
Speaker 2:<laugh>? Yes, I did. So, yeah. Yeah. I'm really excited about this<laugh>. Yeah, my career ended, I had to move into management because you can only do it for so long.
Speaker 1:Right, right. Well it would've been nice to have these, um, those years ago, right? Yes,
Speaker 2:A hundred percent.
Speaker 1:Yeah. Yeah. Good. Okay, so diversity and inclusion, I know this is a, a focus for a lot of big companies. What does it mean at D Hhl?
Speaker 2:Well, I think it's core who we are. I mean, we want the best talent and you're not gonna have the best talent unless you have diversity and inclusion. So we don't want everybody with the same background, the same ideas, the same experiences. We won diversity of thought and diversity of thought wins the game 10 outta 10 times. So we're pretty excited. We do a lot of investment on training on this and educating, and I'm pretty excited about where we stand in that area.
Speaker 1:Tell you a little bit more about how the demographics of the company have changed over the years. Are we in the third inning on this or the seventh?
Speaker 2:You know, uh, as far as innings, that's a really good way of asking that. I mean, look, we're not there at the Inn yet. I think you're continually to involve. Um, and it's not as simple as, you know, I I just take the women in logistics. I'm pretty passionate about that, you know, we're making progress. But that's a really tough one around, okay, so if you think about our industry, you know, you're leading people in a site, so it's really hard to, you can't do it virtual. You have to be there when you have hundreds or thousands of Audi associates. So it's really difficult when you talk about, you know, women having families and being able to be more flexible. So we're working a lot on our P T O policies and more flexibility, you know, our maternity leave, we've accelerated that, so we are trying to pull leverage to make it more attractive and a, a more attractive industry. But those are things that we're not going to be in the seventh inning yet because you can't be virtual, you know, you can<laugh>, you just can't be. We can provide all kinds of flexibility you want, but when you have a thousand hour associates, you know, in a building, you have to be there to lead them. You can't do it through a camera at this point.
Speaker 1:Mm-hmm.<affirmative> mm-hmm.<affirmative> and the proportion of women coming in through our college recruiting process, is that, where does that sit?
Speaker 2:So we are improving, I would say, you know, that is our pipeline. So we, we hired, this'll be a little higher this year, but last year we did a little bit over 500 college recruits and around 33% of those were female. Um, we were targeting 40% and we only got 43%. And that wasn't due to, there just wasn't enough female supply chain degrees or engineering degrees that were actually in the universities we were working with. So I think over time those numbers will go up. But you know, we are moving it up and we're around 32 to 33% overall of our college recruits are female.
Speaker 1:Mm-hmm.<affirmative> in the universities you're working with, what kinds of things are you doing with them?
Speaker 2:So we're doing a lot of, you know, we go speak at the universities, we do scholarships from D H L, you know, we do all kinds of sustainability things. Like, for example, the university I went to, we did a, a tree planting deal to bring awareness to the environment and, and what DHL's about. So we try to spend a lot of time going to these 50 universities and talking about our culture, about how you can advance your career and how you move along and why it's a great place to work.
Speaker 1:Got it. And I think 50 universities with supply chain programs, that's, that's a lot different than it was 10 years ago, 15 years ago for sure. So it's, it's interesting. It's becoming, you know, kind of a recognized discipline, not only in the market but in some pretty big schools. And you can name check yours if you like,
Speaker 2:<laugh>. Well, Texas Tech University is one of the better supply chain programs, of course<laugh>. But, uh, yeah, I mean I would think, and you know, we're looking this year, hopefully you get up to 750. I mean we have room for, you know, interns and full-time associates. And when you're going through this entry level, entry level recruits and management, we've seen it as a really good model. We are usually about one third, you know, college recruit, one third internal promotion and one third external hire. So, you know, it's about a third of our, of our pipeline for getting talent.
Speaker 1:So Scott, have you had, um, personal involvement in the diversity or women in logistics agenda?
Speaker 2:Yeah, I mean, I guess a couple things. First of all, I, I do teach, uh, diversity inclusion. There's a certification of course at d Hhl bronze certification. I do teach that at least once a month. I would also say the women logistics, I'm pretty passionate about. So we have a, you know, a forum, uh, you know, a few times a year. Some are virtual, some are face-to-face, and I've been pretty active in that.
Speaker 1:Say more about the forums. What, um, who participates in that? Who comes to it and what have you done with them?
Speaker 2:Well, I mean it's mostly, mostly women. Of course<laugh>, it's women logistics, but I mean, there are male, uh, people that are on the committee that may be, might be guest speakers, participate on a panel. And actually I got a funny story on that. So nine years it, my ninth year CEO o I think it was my first year CEO, e o when I was on one of the panels and probably a few hundred of our female leaders were in the room and they were talking about, you know, well, you know, when I look at a job I'm getting promoted. I look at it and there's, there's 10 things, there's like 10 different criteria or two different experiences you're supposed to have. And I look at'em, I only have like two of'em, so I never really try to make a move for that career. And I'm sitting there and I'm reflecting as they're like, well what are your thoughts on that? I'm like, wow. When I became c e O of North America, there was like 10 things and there was only two things I was good at. I looked at it as well, this is a really good fit for me cuz there's all, cause two of the 10 things I'm really good at and the rest of it I will make sure there's talent around me that can handle that. So it's just a different way of looking at things and I think it was a really eye-opening moment for several of our, of our leaders around, you don't have to have every single thing to check the box that, and it's a different mindset I guess around, I was looking around at my peers and competitors thinking, yeah, I'm the best candidate and I'm really good at these two things and the other eight I'll make sure there's talent around me. So anyway, that was an experience about nine years ago.
Speaker 1:Yeah, that's interesting cuz I have heard in some of those forums that message turned around now of, hey, don't focus on the, the, the white spots instead focus on, you know, your, your qualifications. So that's interesting. And the, the bronze diversity and inclusion training that you mentioned, who is that geared toward and what kinds of themes would you see in that?
Speaker 2:It's tailored towards all associates, but you know, my goal first was to get every leader who leads Audi Associates through it. So we are like 90 something percent on that, which is really good when you think about, you know, we have, you know, 50,000 associates and, you know, 50,000 total associates and, and you could say 10 to 15% of those are white collar. So you want your leaders to understand what diversity inclusion's about, right? And understand that we all have biases, unconscious biases, and, and how do you manage through those? How do you work through those unconscious biases, whether it's an appearance of someone or a background of someone. And um, and it really, it really focuses on teaching you that you have an unconscious bias and how you manage through that to make sure that you are getting talent that's not just like you, we don't wanna hire everybody who is like me, six foot four white ball grew up in South Texas that went to Texas Tech University. If we had everyone with the same background as me, then we wouldn't have a lot of different ideas or different experiences, I guess would be the main theme I would say on that.
Speaker 1:Yeah, interesting. And what's been the reaction from the teams as as they go through that?
Speaker 2:Really good. I mean, I think people just are shocked about how biased everybody is. Just, it's natural life and how easy, you know your mind, you're so much information coming at you that your mind automatically just goes to your biases. It's just you're more comfortable sometimes when there's so much going on. So I, I think it's been really, really good. We are training the Audi Associates also on it because that is our largest workforce, right? So we want them to not be biased towards their peers and towards the people they work with and we want a better culture. So it's really exciting and, and, uh, I'm passionate
Speaker 1:About it. Great. Great. Well thank you for that. If you're interested in learning more about the 2023 trends discussed in today's episodes, visit us at the Logistics Tech Conference manifest held January 31 to February 2nd and Las Vegas, Nevada Dhhl Supply Chain is proud to be the headline sponsor of this year's conference. Learn more about how to engage with us@manifestatdhhl.com slash all hyphen in. See you in Las Vegas. If you enjoyed the conversation today, please share it with a friend and rate us on Apple Podcasts. You can find us online at dhhl.com/all business, no boundaries, and follow us on LinkedIn and Twitter at at DHL Supply Chain. We'll see you next time.