Episode 192: Why Supply Chain Transparency Matters | Anne Stone, PPAI

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

That publicly traded company may be saying, well, I need to make sure that there's no forced labor in the supply chain, thus the supply chain mapping, or you need to prove to me, you know, what your carbon footprint is, and you need to be able to tell me what kind of diverse spend you're doing with minority-owned businesses. So it's different kinds of pressures from buyers than we've really faced in the past.

Anne Stone is our guest today. If you are not familiar with Anne, let me introduce you. Anne is someone with the knowledge of historian, the mind of a pragmatic philosopher, and she deeply understands supply chain. I enjoy talking with Anne because every time I do, I learn something. Anne is the Director of Advocacy, Member Engagement, and Education for PPAI, the Promotional Products Association International. She guides PPAI's legislative and government relations efforts, oversees the Product Responsibility Programs and the Product Responsibility Summit, which we'll discuss in this episode, and also oversees PPAI's volunteer engagement efforts, professional development, and more. She's a frequent speaker on the topics of product responsibility and legislative advocacy, and she serves on the board of directors for the International Consumer Product Health and Safety Organization. That's a lot of titles and a lot of responsibility, and I'm telling you, she has a wealth of knowledge. Today we talk about supply chain mapping, what it is, why it matters to you and your customer. We discuss the travels of a t-shirt in the global economy, PPAI's DEI initiatives and how they can help you. We also talk about what a rocky, crazy year it was for our friends at the association. We dig into that topic, plus what you can expect at Expo this year, NALC, and more. If you're unfamiliar with those events, listen on to discover what they are about and why it's important to get these events on your radar. Hi friends, I'm Bobby LeHew, the Chief Content Officer at CommonsQ. Before we hear from Anne, You've likely heard we launched pre-registration for SKU Camp. SKU Camp is a bootcamp experience for entrepreneurs that is fun, inspirational, and challenging, but also an event that brings together the brightest in the business to share with each other and learn. On October 27th through the 30th, we are returning to the original location in Palm Springs. It's not just a reboot, but it's a fresh and original vision. We're really excited about the format and what we're doing this time around. We're doing things a little different with registration too. Since SCUCamp sells out so quickly, we opened pre-registration. Pre-registering will add you to the list to be notified 24 hours before tickets are made open to the public, giving you a chance to secure your ticket before they sell out. We sell out quickly, so I encourage you to pre-register to ensure you know when the tickets go officially on sale. There's no cost to pre-register, but there is a cost for the event. Just go to scucamp.com to sign up. This episode is brought to you by Commonsku, the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more or to begin your free trial now, visit commonscue.com. Now here's my conversation with Anne Stone. PPAI made a shift a few years back. I'm thinking in response to the market really regarding product safety. So you widened your scope and now you're hosting the Product Responsibility Summit, which includes 4 main pillars I want to ask about. But this year's event is virtual. It's held Monday, August 16th through Thursday, August 19th. I noticed it's kind of split up basically over a 2- to 3-hour period each day around lunch. I'm assuming that's to give folks time to pop in and out and still work on their crazy workday.

Yeah, absolutely. So what we've realized is that tons of lessons learned over creating virtual events that hopefully will be a total waste of learning experience as we go back to live events. But what we realized was there's this kind of sweet spot from 11 to 3 PM Central Time for virtual events. You know, it allows all the time zones to participate, and it also doesn't eat up your whole day because it's hard enough to carve out those few hours rather than committing the whole day. And yeah, you said how we really expanded the scope of the event. When we started, really focused on one thing, and that's the Consumer Product Safety Improvement Act of 2008, CPSIA, and laws relating to children's products. But the more we dug into it, and if we had kept it the Product Safety Summit, I think we would have ended it in 3 or 4 years. And that was my hope from the beginning, that we can get good at this, we can give the content to our members, and then we can discontinue the event. But what we realized was the scope is so much more than just product safety and regulations. So yeah, we expanded it to include the various pillars. So it's, yeah, it's product responsibility, but it's also environmental sustainability, it's social responsibility, it's supply chain security, and it's product quality. And that allows us to really focus on one element or two elements each year based on what the market is kind of demanding. So it gives us a lot of flexibility in giving our members what they need when they need it.

What is that focus this year?

This year we're doing a lot more on social responsibility and environmental responsibility. Like last year, we really wanted to shift our focus to those areas, but pandemic happened and we ended up focusing on hand, hand sanitizers and antimicrobial microbial rules. And so now we're kind of back to what we've been doing. So we're doing a lot on social responsibility, on supply chain mapping, on global recycle standards, lots of things that I think our members are going to be faced with in the next 2 to 3 years to help them get better prepared to tell their story. Because, you know, you look at our industry and you talk about environmental sustainability, we don't have a good way of telling our story yet. And I think we need to figure out those things to focus on so we can begin to take the steps that will allow us to tell a good story and walk a better walk going forward.

Yeah, two thoughts. One is very wise how you structured this so that folks can pop in and out and still handle their day and all the fires that are going on in their day, particularly given the supply chain issues that are going on right now. Why is it important for both distributors and suppliers to be concerned? Or let me ask it a different way. What has changed in the market to make this year's event a must-attend and why we really need this information?

Well, I think both distributors and suppliers need to be concerned because the suppliers, they're the ones in the factories choosing factories manufacturing the goods, but the distributors need to know how to vet one supplier as opposed to another, and they need to tell the story to their buyers and, and to be able to understand buyers' expectations. I mean, one wonky subject that we're dealing with, there's a restricted substances list, and that's this list that the buyer, sophisticated buyer, might create and say, here's a list of the 432 chemicals that cannot be in any product that has my logo on it. How do you manage that? And how does the distributor share that with the supplier and make sure they're truly complying with those customer demands? So that would be one reason. The other thing that's really changed and why we really want to focus on environmental sustainability and social responsibility this year is really the shift in the investing community to focus on ESG, environmental, social, and governance criteria, because more and more socially conscious investors are using these standards to screen for potential investments. So if a distributor is doing business with a publicly traded company, that publicly traded company may be saying, well, I need to make sure that there's no forced labor in the supply chain. That's the supply chain mapping. Or you need to prove to me, you know, what your carbon footprint is, and you need to be able to tell me what kind of diverse spend you're doing with minority-owned businesses. So it's different kinds of pressures from buyers than we've really faced in the past.

Right. Lots more pressure from wider areas. This topic too of supply chain mapping, I know you're passionate about that. Can you explain what supply chain mapping is?

Sure. It's really going deeper into your supply chain to know where everything's coming from. So it's one thing for a distributor to know they're getting a product from Supplier X, Y, or Z, but where is the supplier getting that product X, Y, or Z from? And not only what is the factory that they're buying that product from, but where are the component parts that that factory is getting the products from? And where are the raw materials that are going into those component parts? So it's going back into the supply chain. So, you know, for a distributor, their tier 1 supplier is likely the supplier in our industry.

What do you mean, by the way? What do you mean by tier one?

Tier one is just the person you're buying it from, the next step. So for distributors, if they're buying from suppliers, they'd be their tier one supplier. Suppliers would be going to their tier one, which would be the factory that they're purchasing the finished goods from. And then you go to that company that's manufacturing the finished goods. Where are they getting their component parts? Then you go to the component parts. Where are they getting their raw materials?. So it's really going deeper into the supply chain to know where all the pieces and parts are coming from. And that's being triggered from a couple of things. The biggest thing is the challenge of forced labor in the supply chain, particularly related to cotton coming from the Xinjiang region of China, because there is an ethnic minority group there called the Uyghurs. And they are different from the Han majority in China. There are Uyghurs that are being put into forced labor and being put into factories, not necessarily being paid, not willingly, and being forced to produce these goods, whether it's the cotton or other items that they might be forced to manufacture. And if companies are importing products that are produced wholly or in part by forced labor—prison labor, forced labor, slave labor—it is illegal to import those products into the U.S. And so there are a number of Withhold Release Orders, WROs, that have been issued by Customs that will detain those items when they're being imported, and you cannot release them into commerce. So that, that is just a big practical reason to understand your supply chain and where your products are coming from. Yeah.

You had a great phrase called dirt to shirt.

What do you mean by that? So I don't get to take credit for it. It's something I heard. But it's really this expectation from customs and expectation from buyers that you need to supply chain map your products from the shirt to the dirt. So you know where the shirt is, the cut and sew factory for the shirt, for example. But where is the cotton being grown? Where is it being ginned? Where is it being milled? And you have to be able to go back in some cases to the farm itself.

At Olin College in Massachusetts, there's a first-year course for students on the subject of dirt to shirt. And the students— I thought this was fascinating— the students are required to go to a thrift shop, select a shirt, and then tell the story of that shirt— where it's made, how it made its way here to the US. And it's a great exercise in understanding the global village that makes our clothes.

You know, there's a great book I read a couple of years ago. It's called Journey of a T-Shirt in a Global Economy. And it did exactly that. It traced this shirt that they just bought in a store back and really told the story of how a t-shirt is produced from the dirt to the shirt.

We will link to that book in the show notes. Also want to encourage folks to check out a poem— yes, a poem— about a shirt by Robert Pinsky, which talks about the narrative and the people who touch our garments as well. But putting this narrative around product, to me, helps communicate what supply chain mapping really is because that's what it is. It's telling the story of where our products originated, what they went through. And like you said, with tier 1, tier 2, sometimes this language we can get lost in as distributors and we can wade into the subject and get overwhelming. But it's really about understanding where our products are from.

And without understanding where the product's from, you don't understand the product's impact in the world, you know, whether it's environmental or social or anything else. And it takes this— it takes it from being a shirt to being something much bigger as far as a conversation goes.

And you have seen in your career this conversation happen with large companies or large companies who are very conscientious about this. But now we're seeing this conversation held at companies, organizations, consumers at every level. I mean, it's now become very common for us to want to know, you know, like you mentioned before, from farm to table. We think that way about our food. Now it's becoming very common that consumers are wanting more visibility into the supply chain. They want more transparency. It's not just a buzzword. They— this trend is increasing with business buyers. What have you seen? Have you— am I wrong about this? Have you seen this massive adoption, or at least we're on the cusp of a massive adoption, by just the average buyer as well? Yes and no.

I mean, I think we are. I hope we are. I keep thinking that we're just at the ledge to where this becomes something that is universal, and then things happen. Yeah, now a pandemic happens, and all of a sudden everything's right, single-use plastic that we're throwing in a landfill. And it's so frustrating to see the step back, but there's also this momentum, kind of a boomerang effect that because you go so far disposable, then you reset and you're like, okay, I need to, I need to focus on this differently. But I think with the buyers that are coming up in the industry, they want to know this stuff, you know? So much of supply chain mapping really came out It kind of started in the '80s with protests on college campuses when students realized there was forced labor putting together, you know, supplying all the apparel that they were buying in the college bookstores. And because of that, NGOs popped up like the Fair Labor Association, the FLA, that have really been devoted to protecting workers' rights on a global scale. And they've become a great resource and friend to us in helping share this information. But, you know, also the conversations about the supply chain map You know, and you can't go to distributors and expect them to be able to have that information. You have to have deeper, broader conversations to be able to get to that. But I do think that the shift towards environmental sustainability and social responsibility, I think those things are here to stay. And I think they're just going to get more important.

And you had a great point about folks, the new and emerging buyers are coming equipped to ask these questions now, just like me citing that class that's having to do a study. On where a shirt is from, they're going to come equipped to naturally ask those kinds of questions when they get in. So they don't have to be necessarily trained by some corporate structure to ask these things. They might come with that innate curiosity about products. And I think a very strong bias towards expecting people to be able to answer their question confidently and quickly, which is also why I would encourage folks and distributors— I know it's a crazy time— I would encourage you to go to the Product Responsibility Summit simply because there's one fear I think folks have, and this is an overwhelming subject. There's lots to learn, but, but the way you've structured it, you can pop in and out of there and still manage your day. And something I've noticed with buyers, at least they want to know that you understand at a base level exactly what they're talking about, that you at least can engage with them. You may not have all the answers with the buyer right away, but you know what they're talking about and you can go, finding this information out. Plus, I do think there's a new framework on the horizon for distributors to vet their supplier partners. It's happening now, I think, where in, in the past it's been about speed, uh, product quality, the product itself. Right now, can you just get the product? But we've always needed a new criteria, and that is this criteria. And I think it'll be very common 5 to 10 years from now that we will have this very conscientious criteria for our suppliers.

So, I mean, I think there'll still be those those sales that are just done based on price. But I think, yeah, certainly the bigger, the more sophisticated buyers are going to have very different expectations. And just one other little shameless plug for Summit. One thing we are doing is recording everything but the roundtable discussions. Those we don't record because we want them to be kind of open conversations where people can make true connections with one another, but we're recording everything and we're just going to keep it all on the platform for 3 months. Because I know as hard as I try to, you know, block out my day for virtual conferences, inevitably I miss something. So it's all going to be up there so people can see it on demand. Great.

Is there some tension around the PPAI Association, who obviously is attracting members and suppliers and distributor side? I mean, you're very passionate about this. You can hear it in your tone. You can hear in just the, the way you talk about this subject. Is there any tension around this subject when it comes to our industry and the association in terms of, you know, we want to recruit new members, but we really want to raise the level of the conscientiousness of our business?

I don't think it's a tension. I think, I think it's an obligation. You know, when I look at whether it's DEI or environmental sustainability or corporate social responsibility, it's really not different when we started just dealing with product safety regulations, because they felt like really scary, daunting challenges that people were kind of hesitant to start the journey, because it is a journey and it's not an easy one. Great point. But once a piece of regulation came out that made it a business imperative, it became a different conversation. So when CPSIA came out, all of a sudden we had to have this conversation and we needed to start on the journey. And some people were further along on the journey. Some people, it was an easier journey. Some people were resistant to get started. And I think we're in exactly the same space. And I think it's the obligation of a trade association to try to raise all the boats by giving as much information. We can't force you to take the journey, but it's our obligation to give you the tools to begin the journey if you choose to do so.

I love that. Speaking of, it's a nice segue into DEI. We were honored to have Johanna Gottlieb, the chair of PPAI's DEI task Task Force, an amazing group of folks on that task force, by the way, great friends of ours. DEI is such a crucial topic for us moving forward. And can you share what resources you've created so far that can help distributors and suppliers?

And I'll link to these. Yeah, absolutely. So we're really digging into diversity, equity, and inclusion, which is what DEI represents. And we do have a number of resources, some of which I was very fortunate to inherit from former staff members with PPAI. And what we're trying to do with the task force is really do a couple things. One is publish and create an inventory of the resources we have, you know, whether it's our DEI playbook or it's archived education content. Then we're working with the task force to create safe places, safe spaces for conversations to, you know, learn from one another. So creating places where we're not lecturing to you, we're all sharing information and experiences and just trying to create a new, more equitable mindset. And then we're also focused on the business imperative, you know, going back to that investing strategy of ESG and trying to identify all of the different certifications that businesses may have as certified minority-owned businesses and creating ways to search for them. So when you're trying to you know, as a distributor company, when you're trying to diversify your spend to more minority-owned companies, you have a resource to be able to identify who they are, you know, and it's, it's just a fascinating journey to be going into. And, and the other thing that we're going to be doing is we're going to be taking the playbook that we have and we're going to start trying to turn that into a series of shorter practical how-tos to again, help people on that same journey. By giving them the baby steps instead of saying, okay, here's, you know, here's a 100-page textbook that you can implement. Let's break it up into things that are just a little bit more manageable.

Yeah, I really like that. And with the same experience with product responsibility, this is a journey we're all learning. We're learning from each other going forward. I was going to ask, you know, suggestions you have for how we can tap into the work that the DEI task force is doing. But that's exactly what— that's a great thing to hear that you're going to be breaking this down in that way, because I think I read the playbook. I loved it. I thought it was a great conversation starter if I were still a distributor with my team, and it's a great place to start. But I also love what you're doing in terms of breaking it down for us in the future.

And the other thing we're doing related to DEI is we're really trying to weave that content into all of our education. You know, we're weaving it into our webinars, we're weaving it into our live conferences. We're just trying to make sure that we're delivering the content in an accessible, manageable, practical kind of way at every opportunity. Yeah.

Well, speaking of, you're really good at segues, Anne. You lead not only public affairs but member engagement and professional development. My gosh, you have to be very, very busy. This past year has had to be one of the toughest you and our friends, association colleagues, have had to go through. I know PPAI has been such a stalwart for this industry for years, and it's been a tough year. This past year for many associations. There were so many topics and changes to stay on top of. But I just want to say kudos to you and the team for all the work that you have done, particularly over this past year as you have gone through a difficult time as the leader of the largest industry's largest event expo. What was this past year and just being in the association and being a leader in the association? What was that like?

You know, it was, it was interesting and it was exhausting. It, you know, it was— yeah, we spent a year playing chicken with contracts, right? You know, who's, who's gonna blink first? And then you can't say anything because then everyone will know who's gonna blink first and what the plan is. So it's just— it was— we learned a lot. We learned about a lot about how to write contracts going forward, cancellation clauses, speaker clauses, but it was You know, it was a number of different things. One is I think we as an association were blessed with just the most fantastic board of directors that we were able to work with as we navigated all of this. I mean, a lot of people don't know our board was meeting every single Friday for a year to just deal with everything and having the ability to make really quick decisions that were very important or being able to check in on things. I mean, it's no easy task. To cancel Expo that would have been in January of 2020 and shifted to virtual. And so it was just planning to cancel, but also planning to hold it if we can't get out of the contract. And then how do we do the direct-to-you? And just learned so much in the process and just learning how to do an interesting, compelling virtual event is something else. It's, You know, I mentioned this before, it's like 4 times as much work to deliver a less compelling product, right? Right. 2 things.

Go ahead, go ahead.

You put into it from both a staff production element and a participant component, the more you get out of it. And I think we were able to pull off something kind of magical with Expo Direct to You back in January.

Actually, that's a great takeaway for anyone doing events. I've always said it, you know, you get out of an event what you put into it. And we all had to battle this sort of lean back and just watch a virtual experience, but it really depends on what you put into it. I want to say this too about the board. You mentioned the board, and I have good friends on the board, and you would never know. And here are folks that are trying to run their business, they're trying to keep their heads above water, and you would never know. The intense contribution they made over the past year to our association. So to all my friends and to those I don't even know that are on the board, thank you for your work. And I want to ask you, what did you learn about virtual versus in-person over this past year?

In-person is so much better. Um, no, it's, you know, it's interesting. There are pros and cons to both. I'm probably saying things, you know, common sense to everyone. The benefit of a virtual event is you're not investing in the travel. You can have any speaker who is not, you know, so they can't, they can't travel, doesn't matter. You know, they're not available at that time. Well then just prerecord it if it's the really compelling content. And you know, if you find the right platform that will allow that engagement, that will allow people to kind of be in control of their own experience in the virtual event, That's really helpful because that's the control that's kind of lacking when you're just having information fed to you. And to just be as mindful as possible of balancing the information that's being fed to them and allowing them ways to really actively engage on the platform, I found to be really, really important as well. And I think if you look at the virtual conferences and virtual events as a tool, to weave into things. I think, I think it has a place going forward, but I don't— yeah, I'm hard-pressed to identify anything that would replace an in-person conference and certainly an in-person expo. It's— they just, they can't compare. It can be a tool and it can be a nice thing to have in a time when we can't have what we really need, but I'm looking forward to getting back to the in-person event. Right.

Before we get into expo, I want to mention that NALC, if you're not familiar with it. I know we have a lot of folks that are new to the business. We have a lot of folks that come to the SKUcast and it's their first experience with PPAI. But NALC is the leadership conference in Fort Worth, October 3rd through 5th. What excites you about NALC this year, Annie? Can you sort of describe what NALC is in distinction from Expo for new listeners?

So NALC is our North American Leadership Conference. It is a conference that really is geared towards the leaders in in the industry, and really trying to give those leaders the tools, the insights, the strategic foresight to drive their businesses, to prepare their businesses for what's to come, and to provide really high-level networking opportunities for them to learn, engage, and share with one another. So it is going to be in Fort Worth, Texas, October 3rd through 5th. And what excites me the most is it's going to be our first in-person event. So that's big right there. And we have a really solid agenda. We have a new professional development manager, Pamela Brown Mathis, and she's put together a great agenda for the program. And it really, it balances creating nurturing inclusive cultures, it addresses strategic foresight, leadership, economic outlook, and gives plenty of time for high-level networking. And so I think it's really going to be a really top-notch content that's delivered when we're so eager to get back to getting together and sharing information. And the other thing that's really neat is we've been able to create this kind of all-inclusive experience. So the registration also includes hotel rooms with the registration. So it's this kind of complete package of just come and everything will be taken care of. You can just really focus on the educational experience. Yeah, that's great.

I love NALC. I love the fact that you mentioned high-level networking, and every time I go to NALC, it feels like we're all on an even plane. You can turn left and talk to an owner or CEO or president of one of the largest manufacturers in the business or largest distributors, and you can be a distributor running $1 to $3 million. I love the fact that that intimate networking exists at NALC, and it's in Fort Worth. What's not to love about Fort Worth? If you haven't been, I'm being very serious about that. I love Fort Worth. Let me ask you one last thing here before we close. And two things, really. Speaking of Expo, it's kind of hard to believe that we're talking about Expo. I know you've been talking about it for a long time, but what can we expect this year when it comes to education and the show in general? Can you speak to some of the changes we can expect?

Sure. From a professional development perspective, what we're doing is we're making a bit of a shift this year. This year, rather than having education primarily on education day and then a smattering of education during the rest of the event, we're taking a slightly different approach and we're looking at it as a conference of a one-day educational conference preceding the show being open. And so having fewer curated educational opportunities throughout the day with a number of different tracks and breakouts. So really shifting from having 80 sessions to having 25 sessions that'll have bigger rooms with kind of broader-reaching content and discussions. Because for so many people, if you have 10 different sessions, there's going to be one that's the real standout. And what we want to do is kind of make the rooms bigger so that people can get to the content they want and just make it a little bit more carefully curated going forward as an experiment. You know, I mean, the other thing that we learned is if there's a year to take some chances and break a few things and see how it works going forward, now is the time, right? But yeah, we've been getting a lot of really good feedback from, from members looking forward to just getting back to the show. Yeah.

Well, last question. I want folks to get a sense of just how relevant PPAI is to our business life. And we have an audience of folks whom percentage might not be members. And so let's just ask— close this with the most basic question, but I think it's important. Why is it more important now than ever to be a part of the industry association? And we probably answered it in this whole interview, but I'm gonna let you answer that, Anne.

You know, and I'm probably gonna answer in a way that seems a little counterintuitive, but I would say for anyone who's not a member of PPAI and you're thinking about becoming a member of PPAI, you know, maybe your first step is to actually join your regional association. To make those local connections and have more of that direct, you know, networking and collaborating with people that, you know, are in your community or close to you. But I also think, you know, just joining PPAI, you know, I think it is good for your business because there are just so many resources that we have available to members, whether they're large or small or in between. And the other thing I would say is, you know, if you're thinking about joining the association, just maybe reach out to someone on staff and just start a conversation because we're closer to this. Like I say to members all the time, if you're looking for something on our website, just send me an email and I'll send you a link because I'm gonna find it faster than you. And if you can build that kind of relationship with people on staff, I think your experience is probably going to be a little bit enhanced because you're almost— you almost have a concierge guiding you through your first experience with the Association and just getting to know all the resources that you might not find on your own.

Yeah, I love that comment because I don't know that we fully appreciate just how large our association is and just the, just the magnitude of the industry that we are in and that we work in. And to have that sort of concierge service, as you mentioned, is, is wonderful. And thank you for joining us today. It was my pleasure.

Thanks for giving me the opportunity. I really enjoyed the conversation.

Thanks so much for tuning in to this episode of SKU Cast. Be sure to keep up with our latest content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.

Mm-hmm.