From cop 26 I mean, the idea of a calendar towards zero for logistics specifically was very clear, you know, like stop selling petrol and diesel cars by 2035 buses by 2030 and heavy tracking by 2040. And that's huge really. So it means innovations towards alternatives must be accelerated.
Tom Raftery:Good morning, good afternoon or good evening wherever you are in the world. This is the digital supply chain podcast, the number one podcast focusing on the digitization of supply chain. And I'm your host, global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today I have my special guest, Juliet. Juliet, would you like to introduce yourself?
Juliet Mwangi:Thank you, Tom. My name is Juliet Mwangi, a problem solver at heart and our customer experience professional. With a decade of work in the sub Saharan market driving voice of customer happiness and retention for online platforms in ecommerce and logistics. It is in pursuit of global exposure, diversity, and international work experience that I joined the Afrika Kommt program. I one year career in life transformational experience in Germany. So I'm currently based in Walldorf. Working in the global digital logistics solutions management team at SAP, specifically looking at sustainability in the logistics industry. It's an honor to speak with you, Tom. And I look forward to an insightful session.
Tom Raftery:Thank you, Juliet. Fantastic. It's an honor for me too tell me you mentioned that you're part of something that you called Africa Kommt, now, I know, Kommt is a German word, meaning to come. So Africa is coming is I'm thinking what the translation of that is? What is it though?
Juliet Mwangi:Yes, yes, it means exactly that Africa is coming. So Africa Kommt is a talent development program that brings together the most visionary young leaders from Africa, and leading German companies like SAP. So the African fellows deep dive into the German corporate specifics business, spirit and the culture and become empowered with international experience, technical skills and German language to become African change agents for the sake of both the German business relations with Africa, as well as for economic and social growth in the fellows, home countries and communities. It is one year. It's a one year program, as earlier mentioned, and it's conducted in Germany. So the program promotes change in African communities, and the German industries as well, thus contributing to the United Nations Sustainable Development Goals. So I personally got into SAP global digital logistics solutions management team was given an opportunity to learn about sustainability in logistics, and correlate these to the SAP solutions we have in this line of business. And that is why we are here today, having a chat on my take when it comes to sustainability in logistics.
Tom Raftery:Fantastic. And we'll get to that in a second. But just, again, a little bit more about Africa, Kommt, how many people are selected every year for this program?
Juliet Mwangi:Okay, so it's, it's a really, really competitive program. If I if I if I look at it from a numbers perspective, so for my year, I think there were about like, 9000 applicants from all over Africa, and only 40 candidates got selected across Africa.
Tom Raftery:40 out of 9000. And you were one of those congratulations. That's really impressive.
Juliet Mwangi:Thank you, Tom. It's It's truly an honor just representing Kenya and Africa in general
Tom Raftery:Superb, and the idea then is you stay for a year you learn a lot, and you go back and bring those learnings back to your home country. Is that it?
Juliet Mwangi:Yes, exactly.
Tom Raftery:Fantastic. Okay, superb. So you mentioned sustainability and logistics is kind of your area of interest. Tell me a little bit about your outlook on that, because it's a kind of a broad topic. Sustainability in general is a broad topic. So what about sustainability and logistics? Tell me about that.
Juliet Mwangi:Okay, you're correct on mentioning it's pretty, pretty bold, and it is extremely, extremely broad. And so this once I got in, like, whatever idea I had about sustainability, sustainability was new to me. I had some sort of logistics background, based on just movement of goods, from ports, to distributors all the way like to the last mile delivery, but I didn't have like sustainability perspective, like in the broadness that it has, right nonetheless, within the past few months, I got to learn about it and kind of like form an opinion. So as that now, I believe the sustainability and logistics is an important topic for all logistics leaders. It does require a new data points to be captured to measure carbon emissions, then once measurement is done innovation around ways to reduce the emissions. And this might require new business models and heavy investments in the long term. But this is necessary to meet both the current and upcoming regulations. So if I look at it from the perspective of the stakeholder perspectives, investors, shareholders, regulators and consumers are all shifting to demand responsibly derived products and services with a smaller environmental footprint across the entire supply chain. And it's important for all logistics leaders to join in the sustainability journey, which is still in the early stages with the main question for most of them being how to address it without losing shop or running bankrupt.
Tom Raftery:Okay, and talk to me a little bit about the impact of logistics on carbon emissions, because obviously, that's got to be pretty significant, right?
Juliet Mwangi:Yeah, yeah, it is. And to really, like bring this out, I think it's important I start from the door the role that logistics play in relation to the supply chain. So, logistics is vital in supply chains and supply chains lie at the heart of the global economy. So first, we have like the maritime and rail sectors, as critical enablers of the flow of energy resources like oil and natural gas and commodities like steel, fertilizers, and containerized consumer goods. Then we have the aviation sector, which drives movement of time sensitive products and high value consumer goods such as cut flowers, electronic parts, fresh fruits and vegetables. At the base, we have road transport, the most common form of freight transportation for the last mile, or to the point of consumption around the world. All these modes of transport are linked by various types of logistics sites, such as warehouses, fulfillment centers, or yards, where goods are stored repacked and distributed from. So, operating the transport modes and logistic sites requires energy. And at the moment, most of it is dependent on fossil fuel, therefore emitting greenhouse gases and contributing to the climate change. The impact of these activities is large and growing in such statistics plays transport as the second biggest greenhouse gas emitted in the world contributing a fifth of the global emissions of this high transportation emissions. 60% is from passenger transportation, while 40% If is from the movement of goods, and this is the focus of this discussion. So when we look at the different modes of transportation and their respective emissions Road, remains by far the most dominant source of global logistics emissions contributing almost 62%. That's not all, we expect strong economic growth to create a huge demand for freight transport. And the demand is expected to triple by 2015, largely driven by the developing nations, Asia, Africa and Latin America. So as other sectors decrease their reliance on oil and gas, the transport sector is predicted to be the most carbon intensive sector by 2040. And without intervention, then freight transport emissions will more than double by 2050. But this doesn't have to be this way.
Tom Raftery:Okay. Okay. So if it doesn't have to be that way, how do we stop that from happening?
Juliet Mwangi:So, very, very good question again. So for transport specifically, like I mentioned earlier, the ability to measure account for your carbon emissions and show that you're reducing it will soon become a key decision factor on whether you know you're sustainable or not. And for carriers in third party logistics it will determine whether they get a deal or not. So tech companies like SAP, are working tirelessly, tirelessly with customers, and other partners in the ecosystem to innovate around sustainability, and help customers to embed sustainability insights into end to end processes throughout their business networks to ensure efficiency gains, social responsibility and compliance while mitigating risk. This entails creating tech solutions that enable companies to meet global obligations, both current and upcoming, makes their current processes sustainable and efficient. And also in the creation of new sustainable products, services and business models so, I'll split the initiatives into two short term and long term.
Tom Raftery:Okay, so go for it. Tell me about the short term and then the long term consequence or initiatives.
Juliet Mwangi:Thank you. So the short term for me, are like the low hanging fruits. You see today, the business and the definitive business issue is to make sure sustainability is profitable. And that profitability is also sustainable, sustainable. So when you look at logistics, it's always been about driving cost down while enhancing speed to meet and exceed consumer demands and expectations. And this consumer demands and expectations have significantly increased, especially like with COVID. We are now working from home so I order something from a platform I expected delivered. You know, the next minute, the sooner the better. The longer you you take, the more I don't want. So, at the end of the day, we have to make sure that we, we bring these things together. So cost versus speed and expectations. So the question becomes how do we leverage technology to become even better and more efficient at logistics operations. So let's look at some challenging market dynamics in this industry. So one of the biggest thing that has always been there since time immemorial is insufficient utilization of operational assets. So only 50% of trucks in the European Union have a full load. Other statistics place this number at about 30%. What this means is that 30% of the emissions from transport happen when no item is being shipped. So there's an opportunity here for the sharing economy. In logistics, I believe, something else we can look at is visibility. So it takes about 400 to 500 suppliers to produce a computer. And this shows a definite need for transparency, and accurate network visibility to ensure that these suppliers are all operating sustainably. And there's no child labor anywhere in that supply chain and in the most efficient manner possible. So SAP has implemented blockchain technology in in solutions like the material traceability solution, where we provide this type of visibility like for customers, yeah, and then something else will be like the pressure of transportation cost and service levels which contributed to about 8.2% of cost of goods sold. And that all stakeholders really do want to push this cost lower. So to gain efficiencies and address them. There is a definite need to have an intelligent software that enables measurement of the new data points needed to address sustainability, such as carbon emissions by trip or software that helps with accounting for the emissions and helps to show correlations to enable action to be taken. Something else we can look at is to have a software that enables integration of fleets and logistics management throughout the network to reduce complexity, improve transportation, and optimize demand and freight planning. To avoid dead freight, unnecessary miles and wastage along the supply chain. Also still, a software that can monitor different transportation methods, routes, helping businesses identify their best alternatives to help reduce carbon emissions costs and delays as one is able to counteract disruptions quickly. So this will entail use of predictive analytics and the weather data to identify optimal routes, so that you really, really become efficient, other initiatives on the ground like training drivers on sustainability, and fuel efficient driving should not be left behind? I believe it's important to invite drivers to the table, let them be part of solving this problem. Yeah. And meanwhile, let's make sure that we have some gender equality in the ecosystem. So we have at least more women in this industry, because I believe tech is truly making this possible with automation of previously manly, what we will call like heavy lifting rolls. There's a lot of automation, especially like in in warehousing.
Tom Raftery:Okay, so and some of the longer term initiatives.
Juliet Mwangi:In the long term, I believe heavy investments will be needed to decarbonize logistics. From the industry actors, there's definitely a need to switch to use of low emissions freight technologies such as adoption of renewable energy in warehouses and use of electric vehicles. For the regulators. It's key to continue bringing out ambitious decarbonisation policies that enhance industry action and drive further reactions from cop 26. I mean, the idea of a calendar towards zero for logistics specifically was very clear, you know, like stop selling petrol and diesel cars by 2035, buses by 2030, and heavy trucking by 2040. And that's huge, really. So it means innovations towards alternatives must be accelerated
Tom Raftery:Cool, cool, anything else?
Juliet Mwangi:From my end. I think the first action towards a decarbonized freight is to track and report on the carbon emissions. And at SAP. We continue to innovate with the customers in mind to truly help the world run better and improve people's lives, which is our motivation and will continue in the same spirit as an exemplar leading by example in our own internal business processes, and an enabler where we help customers gain key financial and non financial insights to work towards zero emissions, zero waste and zero inequality.
Tom Raftery:Very good. Very good. Yeah, I think that last point is is really important and it's one that is increasing. Are you going to be mandated. And the point is that you do need to measure your emissions, because a lot of companies still aren't doing it or don't know how to do it. And it's only by the measurement of the emissions, that you can figure out where your emissions are, and how then to reduce them. So I suspect there's going to be legislation rolled out to mandate companies to set targets, measure and report against those targets very, very shortly. So everyone needs to be getting on board that.
Juliet Mwangi:Yes, I agree. I agree in from like a regulation point of view, I do know of ISO 14,083, which is currently still being worked and processed. And I know they will, they are looking at releasing it by end of 2022. So I think for companies, you start now, you start doing something, you start asking the right questions, you start realizing what can you measure, working with the tech companies that have already figured out how to measure and it means you prepare and you're steps ahead, before these regulations comes out, it means you will avoid fines and become you know, sustainable and save your brand.
Tom Raftery:And the other consideration, again, is that your customers are going to start demanding it. So your customers are going to start saying I need to know the carbon impact of my purchase of this service from you. And if you can't show that, if you're not able to measure it and show that then if your competitors are, then you're out of the race.
Juliet Mwangi:Exactly. Actually, even right now, when you do like a request, like I mean, we all end consumers at this at one point or the other. When I do a deal an order from the same company. And then they send me three, four packages. I'm like, Okay, so these represent like four trips. So already as a customer, I'm like, No, that's not a good experience. Yeah. And it's not just a good experience from the fact that I'll be doing a call like this, and then I have to go out and and pick one item after the other. It's just not that it's also like, I care about the cost. I'm like, Okay, if you're doing four different deliveries yet, I ordered once, why can't you consolidate? Why can't you look for ways to just make this one delivery as opposed to multiple and stuff like that? I believe even the customer experience and the knowledge that as customers we have is going to also evolve and we will actually demand better from the companies. Yeah,
Tom Raftery:yeah, no, I thoroughly agree. Totally agree. Okay, Juliet, we're coming towards the end of the podcast. Now. Any question I have not asked you that you wish I had, or any topics we've not touched on that you think it's important for people to be aware of?
Juliet Mwangi:I think we've touched on everything I wanted to speak about. And it's been a good session. I really appreciate. You know, speaking on this platform, Tom.
Tom Raftery:Superb, Juliet, that's been great. If people want to know more about yourself, or about sustainable logistics or any of the things we talked about today. Where would you have me direct them?
Juliet Mwangi:Okay, so to know more about Juliet, or to connect with Juliet, I do have a LinkedIn page Juliet Mwangi. Yeah, it's updated as an Africa Kommt fellow working at ASAP. So hey, hit me up there, and we can continue the conversation. Also, for more information about the solution that we have at ASAP that can help you with some of these efficiencies that I was talking about. I will share with you a link Tom, which we can put in the notes section.
Tom Raftery:Perfect. Perfect. Juliet. That's been great. Thanks a million for coming on the podcast today.
Juliet Mwangi:Thank you, Tom. Do have a great day.
Tom Raftery:Okay, we've come to the end of the show. Thanks, everyone for listening. If you'd like to know more about digital supply chains, head on over to sa p.com/digital supply chain or, or simply drop me an email to Tom Raftery at sa p.com. If you'd like to show, please don't forget to subscribe to it and your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. catch you all next time.