The Supply Chain Network Advantage | Infor Nexus | PI Apparel

Thank you for joining us today for our session on empowering resilience and sustainability, the supply chain network advantage. So today we're going to talk about why a digital supply chain network is really critical and it helps create a more agile, resilient, sustainable supply chain and enable a competitive advantage. So we're going to go through some things such as we'll talk about how it enables running more efficient and agile supply chains, ensuring on-time delivery, how it enables companies to sense and respond to supply chain disruptions options. I know there aren't any right now, but, you know, that's something you could do. And then really it's critical for companies that are trying to run sustainable supply chains. See if I can work the clicker. So let me introduce your two presenters today. So I'll start with myself first. I'm Heidi Benko. I run product marketing and strategy for InforNexus. InforNexus is a multi-enterprise business network. We're really the world's leading global supply chain network platform that connects companies to all their partners, suppliers, logistics providers, etc., to orchestrate both the physical and financial aspects of the supply chain. I'm going to talk about Infor Nexus a little more in a minute so you can understand what we do. But first, I'd like to introduce my co-presenter, Ammar Patel.

Yep.

Hey everyone, my name is Ammar Patel, a recent newcomer to Hong Kong.

I've been here for a couple of years.

I'm the founder of AMP Operations Consulting. We really focus in on scaling and growing and optimizing supply chains within the footwear, apparel, consumer product space. Do things like network optimizations, manufacturing strategies, sourcing, costing, but really the bread and butter around distribution and logistics. Prior to this, started my career at Deloitte Consulting. And then went to the industry, joined Callaway Golf, one of my clients, optimized their logistics network, spent a significant amount of time here in Asia within Japan and China. But I felt like there was a bigger impact I could make in society. Ended up joining TOMS Shoes where I oversaw our giving operation. So how we manufactured and distributed our giving product across the globe. And then eventually oversaw our overall sourcing of footwear. So helped establish manufacturing partnerships within India, Kenya, Ethiopia, Haiti, expanded from China to Vietnam for some of our commercial sourcing. After that, I ended up starting a bicycle helmet brand called Thousand, really geared towards the urban cycle and how product and design can help save lives. Recent newcomer to Hong Kong. My wife was born and raised in Hong Kong, and when COVID happened, we had to figure out where we're going to be. And now I'm loving it out here. So thanks everyone for joining here.

And thank you for joining me. And Yvette, he helps some of our clients with Infor Nexus.

Yeah. And so, you know, a few companies that I've either consulted for or helped start or work with, TOMS is an Infor Nexus client. And one of my clients now, Lululemon, uses Infor for a wide range of modules.

Yep. Great. So glad you can join me. Thank you. All right, so first we'll start off with why a supply chain network is important, right? For setting the stage on resiliency, sustainability, et cetera. First, supply chain networks are complex, right? This is a simple version of a supply chain network. So if you think about running an efficient supply chain, getting visibility across your supply chain, all the sustainability data. All those parties are who you have to connect with, right? 80% of impact to the environment is outside. It's in supply chains. Most of that is with external partners, right? And what we see is the majority of supply chains are still manually connected. How do you interact with suppliers? Still a lot of email, spreadsheets, phone calls, managing data with forwarders, etc. So it's critical to have a connected network. We do see that about 80% of all data and processes sits outside of a single enterprise. So really, to be efficient, to enable that agility, you need to have connected everybody on the same platform. The other thing we see is the rate of change. We run a number of supply chains on our platform. It's about 50 times per second. That's an invoice update. That's a shipment update. If you think about that highly dynamic data, how do you make decisions on it for your supply chain? You need that in one place. So just a little bit about Infor Nexus. You know what we're talking about a little bit here today. So what we do is we connect companies to all their supply partners, like I mentioned, suppliers, forwarders, carriers, brokers, even banks. We have a number of applications. First, it starts with connecting, collaborating with suppliers. How do you collaborate on forecasts and orders? How do you get visibility to what they're doing and work in process? You know, how do you help automate how they pack and ship so they meet your expectations, create standard ASNs and packing? So we have a lot of companies that do a lot of direct ships and get better visibility. And even, you know, we have more and more companies is how do you collaborate around that ESG and compliance? Is another thing we'll talk about today. And then global transportation, we manage multimode transportation, everything from sourcing, planning, execution, visibility, and freight on pay, all on a single platform. Again, it's all the same process, doesn't make sense to have separate systems. And the last piece we do is we manage the supply chain finance process. We automate the procure-to-pay process. And we also provide supply chain financing with our network of banking providers, which is really critical. Because if you want a resilient supply chain, you want to make sure your suppliers are set up, they can keep production running, keep things running on time, that requires capital, right? So with all that in a single view, then we have end-to-end visibility and orchestration. So we make more seamless processes, our customers run more efficient supply chains. And then with everything going on, to have all that visibility in one place and to be able to sense and respond to what's going on in real time, that's that end, the top layer, if you will, of the end-to-end visibility and orchestration. So if you think about what a simple version of a digital supply chain looks like, it's this, right? So everything on a single platform. So at any point in time, anyone across the organization, whether it's planning, it's sourcing, whether it's logistics or customer service, what's the status of the order? Are there things I can change up in a work in process? Are there things that are late? When you have a digital supply chain, you have a lot more information for decisions. It's also a more efficient supply chain. Which we'll talk about today, and then helping drive more sustainable supply chains.

And Heidi, I didn't even realize, but I've actually touched it through every single module that you're talking about over here. And I didn't even realize that.

That's right. That's true. Absolutely. And we'll talk about today. I mean, it's important to have it in one place, and it does make a difference. And I think just one last thing, just about Nexus. I mean, it's an ecosystem, and the reason I bring this up as we really trying to tackle things like sustainability and traceability. It really takes an ecosystem. And Infor Nexus, we've been around for almost 25 years connecting global supply chains. We run some of the world's most complex global supply chains. We connect all those companies with all those partners, as you see, all the businesses managing the suppliers and factories. We also are used by world's leading global 3PLs to run their supply chains because it's You know, if you think about running a supply chain, it's that collaboration, right? So a lot of companies like yourselves probably use Global 3PLs for managing origin operations and shipping. You need a seamless process. So it is a single platform. And then, as I mentioned earlier, we manage both the physical and financial supply chain. So we have a whole network of banks that make sure that suppliers have the— and every supplier, even the long-tail supplier, have the capital they need to make sure supply chains are running. And because it is a network, everyone logs in once. And one of our main areas of focus are apparel and footwear companies. We have the world's largest network of apparel companies, which is really critical if you think about the data you're asking for your suppliers, particularly when we're talking now about ESG, traceability, sustainability. How do you make it easier for those partners to provide that information? The network's really critical for that. All right, so— whoop, how do I go back? It's premature. Darn it. How do I go backward? Ignore that slide. We're not there yet. All right. So we'll dive in a little bit. OK. Can't manage the clicker. All right. All right. So first, let's talk about how we make a more efficient and agile supply chain, right? So what are you seeing as far as what's driving companies to require more digital supply chains?

Yeah, well, it first starts off with what are the driving forces? And there's two main ones.

There's external forces. As well as internal pressures. You know, right now, external, we have a lot of disruptions. Some of that got kickstarted with COVID Some of it is lingering continued implications where we have things going on in the Red Sea. We have supplier disruptions. We have diversifications of supply base, but raw material base is still somewhere else.

So every part of our supply chain is getting a little bit more impacted. Now, also, all the regulatory changes.

Typically, what happens is some of it could be done internally. Then once there's a regulatory or a major external force, it causes a lot of change and a lot of change faster. Then from the internal side, it's, "Hey, wait a minute." Something that would have taken normally 30 days to ship on a boat from Asia to North America is now taking 45, 60, where is my product?

And I don't know how many people here have gotten the question of where my product is, but unless you actually got a true digital platform to actually tell you that, it becomes very difficult.

And so, you know, the internal pressures around questions of when's my product going to be there, seasonal launch becomes extremely critical, not only to understand when a PO is going to be there, but really at the carton level or SKU level when you're going to get it there. The other kind of implications that we're probably starting to get a lot more now is at the board level, "Hey, what is our artificial intelligence strategy?

How are we going to be using machine learning and how is that going to continue rolling out?" So when you combine both of those internal and external pressures, it's really evolved the needs of our digital supply chain over the last few years.

Why is the digital supply chain network a key component? Supply chains, there's There's WMS, TMS, but why a digital supply chain network?

Yeah, and so a single component doesn't get us all the answers we're looking for. I think more and more companies are starting to go into more of an integrated supply planning function.

So everything from the product teams to then working with our logistics teams to working with our sourcing and production teams and even like pre-production planning. This is now getting integrated more and more than ever before. And having a single network that can actually integrate those together is really the key advantage, because otherwise, you know, I'm taking Excel data dump from System A, I'm finding what type of unique identifiers then connect to another data dump via Excel, and it becomes a large process.

And so having an integrated platform or network really makes decision-making much faster, as well as gets the answers quicker to the people that need to make actions towards it.

And from kind of the digital supply chain process, like you mentioned, TOMS, I think it was a great example because they went from a manual disconnected and the rapid growth. How do you kind of put the right foundation in place to scale? And connecting with suppliers, one of their key things was how did they kind of orchestrate the supplier packaging and ASN process. And I still see companies today, they don't have electronic ASNs, they don't get visibility into suppliers. Maybe you can talk a little bit about that process and why it was important to helping.

Yeah, you know, in TOMS there was a few different drivers. And I was actually part of the team that evaluated Infor Nexus as well as kind of rolled it out. You know, some of the biggest challenges that we were dealing with was One, just getting visibility. Two, as you scale and scale rapidly, how do you take a lot of these manual functions and then automate it? 'Cause otherwise headcount is gonna explode during that process. And the typical rule of thumb that any CFO is gonna be looking at is, hey, revenue grows by X, SG&A should not be growing by the same ratio.

So how are we leveraging technology to be able to manage that?

And then there was, things where we didn't have integrations between a few different parties. Manufacturing was on one end, our freight forwarders or logistics service providers were on another, and we didn't have a good way to plan that together. Eventually, that got back to our DC, and our DC says, "Hey, how do we receive this product?

There's not an ASN that's bringing it together. How do we optimize for this?" So within TOMS, we ended up going through, you know, most of the supplier management side.

So, you know, order management, pack and ship, you know, going to scan and pack, and then eventually creating ASNs to the DC. And some of the benefits that we saw out of that was our DCs now were able to reduce our receiving cost by about half because we're now scanning for those receipts receipts.

The other aspects is it actually unlocked capabilities to do a DC bypass. So rather than receiving each of these products, you know, we had a good portion that were made to order that ultimately those could get then cross-docked to the customer at a much faster rate. And then from our compliance team, we actually had a 3-way match for the first time.

So we could combine everything from the vendor invoice to all the HS codes and compliance side as well as what was received and make sure that flowed through well.

And just, you know, what about earlier visibility, right? Because I think everybody talks about visibility of shipments, but also getting earlier visibility to help assure supply.

Yeah, and, you know, that became more and more of a challenge. And ultimately, some of the challenges were when you're growing at the rates that they were—20%, 30%, 50% year over year— the vendor base also grows at that similar rate. And so, you know, when you're onboarding new vendors, the level of sophistication as well as on-time performance became a challenge. And as a brand, you need to know as well in advance that something's going to be delayed just so you can plan.

So you can plan that either seasonal launch might change or merchandising at a store might change, or if you have a retailer to help understand how we could fill in some of those gaps for a seasonal product. Yeah, we're seeing a lot of—

and I think a lot of companies have been dealing with work in process with spreadsheets still. And I would say we've seen a shift, particularly in the past couple of years, on I really need real-time visibility, right? If there's— I need to see that work in process. And it's a very manual process typically, right? For many companies on Monday, I cut a spreadsheet to all my suppliers, go fill this out and tell me the status of the product. And then Friday I get the answer, and then it's Monday.

Yeah, exactly that. And, you know, that's what Townes was going through. It was this weekly WIP report that they sent out to all their vendors. They brought it in, it would take about 3 to 4 days just to go through the data integrity issues because it was Excel-based. And then by the time they had that report out by Friday, everything's updated and outdated at that point. Exactly. And so as they continue continue to grow and scale, there had to be a systematic way to do it to reduce the manual workload, but then also the accuracy of what we're going to be getting.

And so we've seen, like, you can compress the lead time. So companies have actually cut that out and have more accurate data. So have better sense very early on if they're going to meet their on time and full, have their promise dates, and if they need to do something about it, make the shift. Yeah. And, you know, a minute ago, you were talking about kind of aligning the data. In a sense, like you talked about the receiving process, et cetera. One of the things that we see is companies for supply chain still very siloed in general. You've got logistics, you've got planning, you've got sourcing. And implementing supply chain solutions. So I've got over here, I'm worried about procure-to-pay, supplier's dealing with that portal. Over here, supplier's dealing with logistics provider and doing the booking, and here are finance and planning. Of, you know, putting it all together. And I think, you know, what do you share is some of the examples that would help, like, you know, like a vendor booking, for instance, and knowing earlier is a problem. If logistics or sourcing is separate, how does that work versus all together?

Yeah, sometimes it doesn't work, right? So I think that's where businesses, especially with this new integrated planning process, is how do you connect those those together. And sometimes there's EDIs that could push through some of that. Sometimes it becomes a challenge of really getting real-time ETAs and updates back into forward-looking systems. So having that all on one platform has been tremendous for a few organizations I've seen. So that, you know, they've had everything from WIP to the actual production process. They've implemented things like transportation management systems as well as updated ETAs. So now within a single system, everyone's looking at the same information.

You know, oftentimes what will happen is the merchandising team, product team will be looking at their system of record. Maybe it's RMS, maybe it's something else.

The supply chain team is looking at their system of record in Fortinexus. And then there's a process to marry everything together. And so having that as an integrated platform has really helped in terms of just reducing workload, reducing the amount of back and forth that information can get there. Because I'm a consultant, so there's instances where if I didn't see that, I was like, yeah, I could help you out, but it's gonna be very manually intensive. And then people are meeting on a weekly basis just to go through this.

So it's patchwork until you could get a better system to integrate those through.

And you talked about supply chain disruptions that are happening every day now. And so, you know, things that are happening within Red Sea, you know, vessels are getting diverted for 2 weeks. How then are your, you know, your merchandisers going to be planning for that if it's not integrated back? Or are they identifying certain POs that they're manually updating in their systems? So having that real-time ETAs go backwards is really critical to make business decisions cross-functionally.

Yeah, I mean, the ETA is definitely something where in general, right, because if you don't know the true ETA, you have what was planned. And your system availability promises based on that. And if the system can't take the real-time continuous updates, because the ETAs update quite a bit. Yeah. ATP is out of date, right? So to make sure you're able to deliver to your customer or the store, getting that updated information is really really critical. And just, we talked about kind of the shared platform and, you know, everything you talked about, all that manual scrambling kind of goes away. But that's internal. But the other thing too is with suppliers, right? Again, they have the different platforms and all of that versus a single place. I mean, are you seeing and hearing from the companies that you work with that, okay, they get it and the suppliers are getting value to that, having it all in one place makes it easier for them to work with. And, you know, it's almost like a shipper of choice or a buyer of choice.

Yeah, there's, I think, two kind of main feedback points I've seen. One is, you know, just from like the floor levels that are doing the different systems and then integrating through. Thank you for having it at one because a single login we could control and manage at all times. And then the example I was given in the past was we also integrated procure-to-pay.

So, raise a hand here if you had a factory that appreciated being paid on time. I mean, I haven't heard of a single factory that didn't appreciate that.

And so if you could integrate those together with that procure-to-pay process, now they're getting paid on time, and then ultimately that's an incentive for them. Hey, I know this might take a little bit to get set up, but if a brand's had challenges in terms of paying on time, not because of cash on their side, but more because of all the data integrity issues going along the way, it provides a huge amount of incentive for these suppliers to come on board.

Which is really critical. So many companies are asking to get more and more from their suppliers. So what more can they do? Better visibility to payments, on-time payments, and even access to financing, which becomes available when you make a digital product.

And really, that's the key to partnerships, right? We're asking more and more for our suppliers suppliers every single day, whether it's from a sustainability perspective, whether it's from a requirements perspective. So ultimately, in that true sense of partnership is, hey, what can we do to make sure that their lives are also getting a little easier, or they're getting paid on time?

Yeah, I'm seeing a lot of companies are, you know, hear a lot about rethinking or thinking different about supply chain, both structurally how you manage it, but also just in general relationships, right? We're in it together, we have to do what's best together, you know, in the last few years of disruption. How do I make sure, you know, you know, the pandemic— I don't want to impact my suppliers. How do I set them up? There's just so much discussion. I don't know if that's— and certainly I think the companies you're working with, that's kind of the mindset.

But yeah, and you know, I think we're seeing things both on the systematic side, but then also in terms of how organizational— organizations are structuring themselves to make sure that there's boots on on the ground to also understand everything that they're seeing systematically. What is that coming to life? Are there other challenges that we could actually foresee and bring a little bit color to that? Because that also just helps some of the management aspect of it too.

Especially as supply chains are diversifying, supply bases are diversifying. Typically, there's a threshold where it makes sense to start getting offices in these locations. Start getting QA teams within these locations.

But the more and more that we could get those managed, ultimately that feeds the systems and you get a lot more better information through that.

So we were just talking about, you know, that processes and like, instead of scrambling, real-time information, right? Better alignment, better agility, right? You know earlier if there's a problem with supplier or things in transit, kind of managing those everyday delays, but certainly, you know, Supply chain networks also help with supply chain disruptions, which there are many right now and continuous. You know, just putting up with recently what's going on, everything we've seen— Panama Canal, the Red Sea, and then Baltimore, right? You know, these global shipping disruptions are constant. You know, what do you see is like, okay, what's kind of critical for companies right now? Managing and navigating. Yeah.

And, you know, I don't know about everyone else, but like, I feel like the common question is, hey, when is it going to go back to like 2017 or pre-pandemic?

And then ultimately things continue to happen.

There's more disruptions like we're seeing in the Red Sea, Panama Canal.

And so ultimately, like, the requirements for businesses now are are just having a lot more dynamic visibility. I think 10 years ago, having a static kind of lead time, it was relatively good.

Now we're starting to see the needs for real-time ETA updates or predictive ETA updates because even sometimes the suppliers can't necessarily update as fast or know that's what's happening and it takes another week or two to get back. And as we see up here, having like geofencing and actually the locations where things are, It helps just provide confidence within the organization that, hey, our supply chain's on top of it.

We know where it's at. And that confidence level alone helps reduce the amount of questions that we have by like, say, 10%.

And like getting 10% of your time back to not answer questions and then help resolve this is instrumental in terms of quality of life, in terms of getting stuff done, and then making sure that we can also you spend time with loved ones too. And here, you know, you highlight, hey, drilling into like a vessel, what POs are actually on that vessel? What products are in there? And is one of our hot launches on this? And if so, how can we then actually work further upstream to say, hey, we need to air product X, Y, and Z because this one's going to be 3 weeks delayed?

How quick can you find that out? I mean, I was talking to a company the other day, they were using a— they didn't have visibility. They were using their forwarders' control tower. They're like, we didn't know what we had in Baltimore. Versus logging in and going, oh, to your point, that's the vessel. OK. What matters? What orders are impact? What inventory is impact? And all that data is available today. But so many companies, again, you've got to get to that digital supply chain.

And ultimately, if you talk about the amount of volume going through the Red Sea, excluding intra-Asia, about 30% of ocean freight goes through the Red Sea, 12% overall. And then the Panama Canal, you know, we're seeing about 8% of that non-intra-Asia ocean freight. So it's significant. And then, you know, that's just the shipments coming on board.

The bigger challenge— and this is a little bit more of the unknown of how do we factor this in—

is the ripple effect. And that ripple effect, because it's not just the vessel going there, It's those containers and those assets.

How do they get back to Asia and go through? Because if it takes 20 more days to get there from Asia to Europe, it's going to take 20 more days to get back to Asia. And now you're starting to lose assets along the way. In the meantime, carriers are trying to do blank sailings to bank up for it and optimize for shipping.

But once again, chaotic supply chain markets. And integrated platforms and providing real-time data at least helps the business get most informed of how to manage that.

Yeah, I've seen it's been interesting with each one, particularly like the Red Sea and Baltimore. The agility is there. So companies quickly responding. I haven't heard really impacts on delivery. It's more of, okay, now the lead times are longer. We have to plan for it. And the costs with logistics are kind of the two. I don't know if you're seeing the same. Like, we're getting these more flexible supply chains to absorb the impact. But now it's like, how do I factor in the cost?

Well, and I think companies have been forced to become more agile. Like, if this happened 4 years ago, I think it would have been a bigger issue for supply chains. But I think out of necessity, everyone has become more agile, but cost-wise, they're still there. You know, for one of my clients, about half of their lanes are going through the Red Sea.

And so that's either direct or indirect in terms of the other lanes that it's impacting.

You know, from a rate perspective, we're seeing ocean rates get impacted within those.

But, you know, some of the other big things and, you know, this conversation right before here, was about Xi'an and the amount of growth that they have. You know, we're seeing stats, you know, last year I think it was 7% of air cargo. Now it's going up to 15%. And in particular for the big trade lanes, you know, one of the big ones here in Hong Kong to say North America, about 50% of Cathay's cargo space is now dedicated for these e-commerce flights. And so what does that do? Vietnam alone, from March— or from April to March, their air freight rates increased 40%.

40% in one month is astronomical. So from a finance planning perspective, it becomes a real challenge.

And then another thing with resiliency is I think companies are diversifying sourcing, shifting sourcing. That's another area. It's like, OK, how do we connect all these new suppliers and have that flexibility if something goes down to shift, right? Agility.

Yeah. First of all, it's like the diversity and diversification of supply base. But opening up a factory and creating a change in supply base is not an overnight activity.

It's a 5, 10-year journey. And then there's the process of, hey, you think certain countries could be qualified, then you start looking at raw material availability. Then you start going into the levels of quality and anticipation. And the 10 countries you might have looked at, maybe 1, 2 become available. And it's a slow progression to get there.

And once you get there, you have to connect quickly and be able to pivot.

Exactly. Right. And so, like, now managing what could have been 1 to 2 origin resource locations, you have a much more complex network to be able to manage.

So I think that the last thing we talk about, like we mentioned resiliency, efficiency, is sustainability and traceability. And I know it's one area in particular you're very passionate about and you help companies with their sustainability strategies. You know, what's your personal journey? What's that been for sustainability?

Yeah, and you know, I think growing up as a kid, sustainability wasn't wasn't a big thing for me.

And then I had nieces, and I realized that I wanted to make sure that this planet was— that I enjoyed, that we're able to maintain that for not only them, but the next generations there afterwards.

So I started looking into all the things I could do, not only as an individual, but then as larger entities, as well as impacts that we could make within our community.

I started, I lived in LA for a while. I went without a car in LA to see if I could start walking the walk. And let me tell you, being in LA without a car is difficult. But I started biking everywhere. I started taking public transportation just to see how that was.

So there's micro things that I was trying to do as an individual to make an impact. But I think we have so much more power as corporations to make that change.

When I co-founded Thousand, a bicycle helmet brand, sustainability was one of our core values. We are a public benefit corporation, so some of those things that were baked in there are baked in forever. Then things like being carbon neutral, we went 10% above that, so we assessed our end-to-end carbon impact. You know, we try to reduce where possible, and even beyond that, we offset 110% of our carbon emissions. So those were kind of the corporate things that we did.

But one of the things that we found is that, hey, well, some individuals really loved it, and I think everyone that we recruited probably resonated with the value of sustainability.

The definitions and really what that meant was so different from person to person.

So how do you contextualize that? How do you make it real for people? And so we took a broader sense of that, and then just did the 3 Ps.

So people, planet, and profit. Because ultimately, for organizations to make a sustainable model, it takes all 3 of that. You know, I think we've heard people, if you worked with factories and factory audits, make sure there's no forced labor, make sure that the people within the employees, within the organizations have certain rights. Planet is near and dear to me of like, hey, okay, what can you do from a carbon footprint perspective? But then, from a profit side, ultimately for organizations to be able to maintain as an organization, they have to do things in a profitable manner. So how do you balance these 3 things to make it sustainable.

And I think that's the challenge for a lot of organizations now is what is the right balance and what's the key focal point for every organization?

And, you know, we have 90% of the impact you see is with global supply chains, right? So running a better supply chain, less inefficiencies, you know, there's less paper, it's a digital process, less expedites, less inventory waste, how do you connect and manage all that carbon data? And like you mentioned, ESG compliance really does take— how do you connect with this network? And I know many of the companies you work with are setting net-zero targets. How do you see them managing them and what challenges?

Yeah, and I mean, first, I'm so glad that so many organizations as well as industry industries are setting targets. Within the logistics industries, there's 2050 targets.

Then there's 2030 targets a lot of people are going towards.

So I think that's a first step, is saying, okay, hey, we're going to make a commitment to get somewhere. And then once that commitment's done, it's like, hey, how do we actually do it? And typically the first process, and depending on where you are in the maturity stage, is just understand.

Understand how much carbon footprint we have. Hey, wait a minute, we have manufacturers, all these different raw materials. Hey, we have different logistics service providers.

So part of it is just getting that initial baseline and taking the time to spend it to understand where we're at today.

Once you have a good enough baseline, and I would say you have to start with good enough because if you wait for perfection, we're never going to go down on this journey anywhere. So it could start with 50% perfection, it could start with 80%. But ultimately, as long as you know, hey, that 80% general rule, it could help you target where you're going to go after. And for apparel, for consumer products, most of that carbon impacts within product.

So then within the product, you start going into the layers of onion. Are there more sustainable materials, which could take that 6, 8-year time frame to develop? Could take 3, could take a little bit less. You can look at the water impact on the chemical side. But then once you kind of understand, hey, what are the key target areas, you then start going down the roadmap to say, okay, what can we do, and what can we do feasibly and profitably, kind of going back to that P, to make sure that we could do things sustainably in the long term?

Because, you know, one leader might say sustainability is great, it's going to be our core focus. And then you have a leadership turnover and that priority then shifts or adjusts unless there's some type of bigger external factor.

And now with some of these regulatory requirements, that people, that traceability, and making sure that we actually understand where things are at, I think are top of mind for every single supply chain organization.

Well, with just a minute or so left, I think that is the big thing we're hearing now is traceability, right? And, you know, how do you— I mean, this top of mind, you know, digital product passports kicking in 2026 for apparel, batteries, and I think consumer electronics. I know everybody we're talking to is, how do we do this? You know, what have you been seeing and hearing from your customers?

Yeah, and first is, hey, what do we have mapped today? What's mapped from a product perspective? What's mapped from a vendor perspective? And you'll start going in from like tier 1 to like then tier 2, then to raw materials. But when you have a 2026 deadline, normally that 5-year roadmap then gets shrunk very quickly. So I think it goes back to, hey, what can we get within a period of time?

And so similar to like what we looked at, you know, during the factory audit times of, hey, we're going to start measuring, we're going to start looking at it. And then we're going to get a collaborative process with our vendors to help work on this roadmap and journey.

And typically what happens is the most successful partnerships are the ones that are willing to go with you on that journey. And I think more and more, then you start identifying with those suppliers and then start leveraging those a little bit more. But first stop, you go through an entire process map, you understand where these things are coming from. And then try to move. But I don't think we could let perfection get in the way of making progress.

[Speaker] Yeah.

And that's what we're seeing as well, right? So start somewhere. So map your supply chain. We have a number of companies now that are, how do you even get all that traceability? So they're doing it retroactively because a lot of customs, right, in different countries are requiring this attestation. So working to, if you're getting those multiple tiers, the map as well as all the documentation. And I have to do it in 30 days for some of these countries. So they're kind of starting there. And then we're expanding with them. OK, now do specific materials in there, and then supply chain. So it's everybody that you think is like, we can't go all in. They need kind of a path to get there. And just spending a lot of time helping companies with that journey and kind of setting themselves up for success. Well, I think we are out of time. So we'll skip the last question. But I appreciate your time. I know it's lunch, but if anyone has any questions, we're around. Thank you for joining us. Appreciate it.