Chris Shrope: 0:03

80 percent of companies see sustainability as a potential revenue and profitability driver. So, 80 percent of the market, at least by Morgan Stanley that was surveyed, believe that sustainability is actually going to be profitable for them.

Tom Raftery: 0:24

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Sustainable Supply Chain Podcast, the number one podcast focusing on sustainability and supply chains, and I'm your host, Tom Raftery. Hi everyone. And welcome to episode 32 of the sustainable supply chain podcast. My name is Tom Raftery, and I'm excited to be here with you today sharing the latest insights and trends in supply chain sustainability. Before we kick off today's show. I want to take a moment to express my gratitude to all of this podcast's amazing supporters. Your support has been instrumental in keeping this podcast going, and I'm really grateful for each and every one of you. If you're not already a supporter. I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about supply chain. Supporting the podcast is easy and affordable with options starting as low as just three euros or dollars a month. That's less than the cost of a cup of coffee and your support. will make a huge difference in helping me keep this show going. To become a supporter you simply click on the support link in the show notes of this or any episode, or visit tiny url.com/s S C pod. In today's episode, I'm talking to Chris Shrope from Model N and in the episodes coming up in the next few weeks next week, for example, I'd be talking to Cally Edgrin from Assent, and we'll be talking about PFAS. Also known as forever chemicals, you know? Finding out if they're in your supply chain and what to do, if they are. Then I'll be talking to Kevin Frechette from FairMarkit. The week after that, Dan Spitale from UPS Capital. And the week after that, Krenar Komoni from Tive, where we'll be discussing IOT trackers. But back to today's episode, as I said, I'm talking today to Chris. Chris welcome to the podcast. Would you like to introduce yourself?

Chris Shrope: 2:17

Certainly. Hey, Tom. Great to be here with you again. My name's Chris Shrope. I work for a company software provider called Model N. We're a revenue optimization and compliance leader for life science and high tech innovators. And we help our customers and with how they manage revenue, manage compliance worldwide and, you know, life sciences, high tech, very complex from a supply chain standpoint, an economic standpoint, and a regulatory standpoint. And I am a product marketeer at the company. So working with product market fit, messaging and positioning and ensuring that we have the right awareness and consideration in, in the market.

Tom Raftery: 3:13

Okay. Tell me a little bit about Model N. I mean, you mentioned a little bit there, but what kind of size organization is it? Where are you based? How long you've been in business, that kind of thing.

Chris Shrope: 3:26

Sure. Sure. Yeah, we actually are, we've been in the business, you know, I've been running software. You know, this mission critical software for over 20 years. Next year, actually, is our 25th year anniversary.

Tom Raftery: 3:42

nice.

Chris Shrope: 3:43

And yeah, we deal with some of the largest manufacturers in the world from life sciences, pharmaceutical, med tech, and high tech manufacturing and we help them run their commercial operations somewhat juxtaposed from many of y'all's procurement offices, but we help these manufacturers we have an intelligent platform that powers digital transformation. Integrating, you know, technology, data, analytics. We also have expert services for our clients as well, so that they can, we can deliver deep insight and control for them in their process. We have a number of solutions across we're a vertically focused as you've noticed the company. And so we have a number of solutions purpose built for each of our segments. That help automate pricing, incentives, contract decisions, so that these manufacturers can scale their business profitably and grow as they deliver all these life changing products to the world. Modeling right around, I think, a thousand employees, plus or minus, right? And we're trusted in 120 countries across the globe. And I'd say what we continue to do always for our customers is help unlock a growth and profitability through, you know, making business process improvements using data and analytics to help them not only deliver these life changing products, but do it in a way that's responsible on making sure like compliance is a huge issue. Make sure that they're not overstepping any boundaries, which might get them in some you know, get some negative press and certainly a bad reputation amongst other industry oversight. So hopefully that helps.

Tom Raftery: 5:45

Yeah, yeah, yeah, yeah. And where does the name Model N come from?

Chris Shrope: 5:52

That's a great question, yeah. I, I've only been at Model N for a couple of years now. But I've the company's obviously changed hands a couple different times from the founder, gone public and there's always changing ownership structures, but the, the way I've always been, it's always been told to me and I'm an employee at the company is that Model N the N stands for next. So it's Model Next and what that is intended to embody. Is that we are the next frontier for manufacturers to innovate. We, we Model Next is kind of like we are using, you know, the best practices and technology to a build our products and deliver that to our customers so that they can be delighted. And deliver an excellent experience to their customers and so on and so forth. So that's the short story. And I don't have the full story, but hopefully that helps.

Tom Raftery: 7:00

Lost in the mists of time. Fair enough. Fair enough. This is obviously the Sustainable Supply Chain podcast, Chris. So

Chris Shrope: 7:12

Yeah.

Tom Raftery: 7:14

bring it home for me. Why, why is Model N on the Sustainable Supply Chain podcast?

Chris Shrope: 7:21

Great question. Many of the audience was also asking the same question. Right. So when I you know, a number of years ago now, back during our baccalaureate years. I studied, actually, alongside economics, I studied environmental studies, and I was super interested in the economic combination. During my, you know, years, one of the professors in the environmental studies department was very forward thinking. Sold, you know, Had a great way to explain sustainability. It gets used it can be used in so many different ways. Right. But at the core of it the idea is, is that sustainability has to be three things, kind of like the golden triangle in project management. Has to be sustainable for the people profit and the environment. Right. And I think, you know, this is years and years before ESG became the coin term, right? But people matches very closely with, you know, social, profit matches very closely with governance because, you know, you have to, in order to stay in business it has to be sustainable. Like if we were to take one business practice, like price gouging, for example, right? Say there's a short shortage of supply for gasoline. You always see it, you know, all the gas stations increase, you know, what they sell at the pump. Right. But if you're caught price gouging there are laws. If you do it to an excess of 10%, this is taking advantage of people. This is not only unfair from a moral ethical standpoint, but there are also laws like California and others that say, essentially say that you cannot gain off of another person's pain. And so, you know, I think we, that's, we fall very closely in this profit bucket. And then the planet very closely ties to the environmental side. And when it comes to manufacturing they have, there's a huge environmental footprint. And the industries that we play a part of like science is high tech. The complexity of the supply chain has so many, there's so many characters and hands and partnerships. That have to bring from going, you know, bringing one product to every single one of us. And so that's that's where I and we see ourselves playing in this sustainability space, if you say and we support it with technology. Now, we're not going to be the one solution that you come to to solve my ESG problems. And I would argue that it's actually not one vendor at all. It's going to be, especially when you have so many channel partners, distributors, others in the channel that are selling your product to anyone around the world, you know, you know, the end applications are, you know, numerous that you're gonna need a combination of solutions. Some solutions are going to be better for collecting data, making sense of it. Others are going to be better for making, you know, doing carbon accounting from a transparency, integrity perspective. And so, you know, hopefully that kind of like answers the question of why are we here? What do we have to offer for a sustainable supply chain future?

Tom Raftery: 11:07

And so how do your solutions help organizations with their sustainability goals?

Chris Shrope: 11:14

Yeah, sure. What I would say. So, just quickly, I want to state there is a Morgan Stanley survey that was recently done and they asked companies and executives what their thoughts on a number of different topics and sustainability was one of the main topics in that survey. And one of the takeaways, the key takeaways is that 80 percent of companies see sustainability as a potential revenue and profitability driver. So, 80 percent of the market, at least by Morgan Stanley that was surveyed, believe that sustainability is actually going to be profitable for them. And every single one of us in a company, whether it's the company I work for, whether it's any of the number of companies out there in the world, your own business as well, every single person adds value.

Tom Raftery: 12:17

Mm hmm.

Chris Shrope: 12:19

Now the issue is that, you know, we only have a very small window to capture that value and that value is captured typically during a negotiation phase or a purchase decision where price is quoted, sold, orders are placed. And there's a tremendous I think opportunity, when we talk about sustainability of creating value and where we come into the picture is how can you now capture it? We help companies, you know, price quote, manage contracts, you know how they run incentive programs. And then also we build in the visibility from the channel back to your frontline operations. So you can see what's happening way out in the far distance. Some reseller sells your component or your component bundled in a product to a retailer and then that's sold to an end user like you or me. We can see, we can collect, standardize, enrich, and send all that data back so that you can have it at the time of quoting, of the time of actually capturing value so you understand what market demand shifts are taking place, what are the price points that are currently being purchased, you know, for this product or combination of products in the market, how is it being bundled, and this gives you a sense of real time end customer demand. And then you can match that with, you know, you have your existing orders in place. And other market drivers, you can match this together to get a clear view on what actually needs to be produced with a clear visibility on demand, you can understand how to supply, right? We always like basic economics. We want supply and demand of the equal, because this creates the most surplus for everyone. Now it's not often the case. And this is where you need data visibility to drive that type of control. And when we think about like what you have control over as a manufacturer, you have control over what you produce. What you know how much you produce of it and what are the input supplies that you use to produce that and then there's a whole and then you have your whole, you know supply chain network or a channel partners that go and then buy, purchase, sell, and distribute it this this across the world and the right there is scope, you know, or the scope of emissions, right? Now scope, so overproduction, if we think about like, scope one, two, if you don't overproduce. This is a great benefit for you, and society using less material as you're matching demand and keeping the market in equilibrium. Like if, you know, I don't want to do that. You know, I guess I will do this going back four years ago during COVID. I know we're going back there, but we all, I think everyone in the world's eyes were kind of open to how important this high technology is to our lives. Semiconductors, electronic components when all the fabrication plants basically shut down and all this end consumer demand was going through the roof. People were buying, they're working from home, I'm buying laptops, I'm buying this, I'm buying that. There is a huge kind of shortage in components the, you know, all these base commodities that go into what create a, you know, computer that we're using right now, you and me. And that overproduction is a huge cost from an environmental standpoint for whoever is purchasing it, because now the prices are a lot higher. And so if you can better match demand with what you're producing, it's going to keep the market in equilibrium. It's going to save you on your scope, you know, one and two emissions. And then I, I guess, there's a scope three, which is, you know, a whole nother bucket.

Tom Raftery: 16:29

Yeah. Is, I mean, scope one and two are obviously within your own domain and reasonably easy enough to to capture and control. Scope three a lot more nebulous and harder to to control. Is that something you can help customers with as well?

Chris Shrope: 16:50

Yeah, it's a great area to point out. Like I said, I think it's going to be a combination of solutions, but when it comes to scope three, I guess we'll fact check this later, but I believe it's around like 80 to 90 percent of emissions of your emissions are scope three emissions and a large, you know, it's for the industries that we serve a majority of that is coming from that channel distribution. The, the, the movement of this product at the end of the day, which happens, you have, the high tech component manufacturer selling, collaborating with like design manufacturers and OEMs, and then selling to contract manufacturers. They'll might be buying packaging. Then there's the distributors, resellers, brokers, SIs. And there are retailers and all of these individuals can play a part in I think the data visibility aspect of Scope 3. There's, it's so hard to get that data though, right? At least it is today. But what I would say is that companies, the companies that we serve and, and, you know, many of the large manufacturers out there have been collecting channel data for years. They collect channel data for their critical, you know, business operations. We have supply chain professionals that collect channel data, revenue professionals, and many others. And they do this and it's, they do this so that they can match what was sold to what they need to now earn, you know, matching based off of like, you know, incentive programs or other elements of a channel program. And there's no reason that this data scope three mission data cannot also be passed. You get a large, I mean, the amount of data points that we can collect is very interesting. And I think, you know, we sending ship to locations and if we can capture all of that from the very end customer back, you know, kind of backtracking to you as the manufacturer. I think this, you know, from a supply chain mapping exercise gives you great visibility but then it gives you now the action to say, okay, how can we improve? I understood that you, Mr. Distributor sold to XYZ Corp on the East coast. And I also see that you sold on the West coast. Now we've identified that you're our, you're our distributor for the East coast. And actually we have a separate west coast distributor and we've set this up you you set up, you know your channel partners in a way so you can hide the highest penetration in the market and if one distributor reseller whoever is selling in another region they're not supposed to this is also means that the shipment of products is going in a place that wasn't intended to and this is additional cost from a distribution logistics perspective. And quite frankly it doesn't do them a good service and doesn't do you a good service because that means that they had to undercut someone else to make a deal on the West Coast and the other distributor now is, is confused, but that's a little out of the nebulous of sustainability and supply chain. So why don't we bring it back now?

Tom Raftery: 20:30

A lot of this. requires a lot of data sharing and organizations typically traditionally have been slow and cautious about opening the kimono and letting other people see their data. Is that something that's starting to shift? Are people starting to be more collaborative about that

Chris Shrope: 20:59

I would say yes. Like, I mean, I get the, I get the hesitancy. You don't want it to look like you weren't doing something good the whole time or, or that you're catching up now, like that's a brand reputation PR move. But I think at least in the circles that we play in at Model N with our with the manufacturers that we serve, yes. There, I think has been a historical, at least on the high tech side, a historical kind of adversarial relationship between the manufacturers and distributors, you know, kind of fighting over, you know, who's going to get what piece of the business, but where channel collaboration is something that has definitely been seen in a different light as of recent. And I think it's all around how can we coordinate as a vertical, as an industry, as a market to not have some of the pitfalls that we saw a couple of years ago, where there was all this overproduction, underproduction, now you can, you can still see it. Like, we're still today catching up on our integrated circuit unit shipments. Like because of that, you know, there's all these, you know, we're doing really good on on the leading edge but all these analog integrated circuits are still catching up. There's I think a greater sense of we need to be a coordinated market because there are so many areas that things can fall through the cracks and we at Model N actually launched a product not too long ago, about six months ago called Channel Collaboration. This is a channel partner portal where your channel partners can log into as well as you to understand their channel data programs. What file formats they need to submit, how to submit. You know, there's when you do submit data, it goes through our, we have a, you know, very sophisticated and robust processor for standardization, root enrichment, de duping, matching, validation, and others. And this ensures that when the channel data is submitted from the channel, the manufacturer gets it back in a clean format so that it can be used by supply chain and by other critical down you know, downstream functions to manage actively, you know, proactively manage this instead of reactively management, which I think is, is where the industry had been on a number of these issues.

Tom Raftery: 23:35

And I mean, we've talked about things like emissions data, scope three, that kind of thing. What about the S and the G? from ESG? The S and the G, the G of ESG. Is that something you're helping customers with as well?

Chris Shrope: 23:53

Yes, yes, most certainly, let's go. I guess we'll go in order. So the S, social when we think about having responsible and sustainable supply chain this means having responsible partners in that. Your suppliers your channel partners look, everyone's going to have, you know, a roster of their preferred suppliers, their preferred buyers, you know, and you want to be as high up on that roster as, as possible so you can get the most business, be kind of at that epicenter in, in your in your space. And what we do is we provide for companies, you know, who have many, many channel partners running, you know, channel programs, we have these channel partner score cards, which actually provides a benchmark and a, you know, KPIs to measure Mr. Distributor, Mr. Reseller. We are working together on a number of these programs. This is what we want to see from a data perspective, from a selling perspective. And then, based on performance these partner scorecards get filled out as the data comes in. And allows for quick, anytime you have a QBR with that, you know, with that other entity, you can bring this up. You know, we're not on target. We need it. We need you to be here. Here's a way to do that. And so we can really kind of prescribe ways to identify the best performing, the worst performing, and those who just need a little nudge from your, so, you know, basically creating responsible supply chain partnerships. And then on, You know, the governance side this is an area where we actually have seen quite a bit of uptick in, you know, the most recent I guess, couple of quarters. And this is, I think the most recent uptick is due to some of the geopolitical tensions around the world where we have still the ongoing Ukraine Russian conflict. We have Israel, Gaza, there's, you know, there has been heightened tension in, you know, between China and Taiwan which is, is, hasn't necessarily been new, but all of these are kind of bringing to bear the need for more compliance from a governance perspective. You know, this is how like how am I going to manage risk? Who am I going to do business with? How am I going to do business? The transparency integrity behind that. And i'll just mention I I mentioned the the conflicts and so when a drone you know is shot down in ukraine and the ukrainians look on the inside and see all of these US chip manufacturers components It starts to raise, you know, the alarm is raised now. Governments are now asking questions. Audits are being done where audits hadn't traditionally been done. And I think this is, you know, this is kind of, that's the way it is. Not everyone knows the rules. Like ideally you go in business, you understand the rules, but as your business evolves, so do the rules and the laws. And the current morals, ethics of the time period. And so, if you hadn't done an audit, you might now need to do an audit. And upon, upon that audit realized that, wow, this distributor that I had is in Turkey is selling to Iran. I've only, they only have licensed or distribution rights to sell to other areas in that in that region. And this is a way that you can, through identification and audit ethical business practices, say, Hey, we need to, you need to have your own internal control process, Mr. Distributor, whoever, because now this is impacting my business and my ESG goals and I guess I could keep going on. Uh, yeah, I'll let you,

Tom Raftery: 28:56

yeah. Do you have any customer success stories you can point to?

Chris Shrope: 29:01

So we have if you, if you can go to the Model N website and we have plenty of customer success stories and from a high tech manufacturing for six uh, we have customer success stories. Across, you know, how companies are negotiating deals, how they're managing incentive programs, how they're managing channel data programs. And from the channel data management perspective, you know, companies that have signed on with us some of the elements that they have reported on is that since having Model N, they've seen a 99 percent reduction in channel data intervention, meaning that now with a solution like ours, they're confident that the data that's coming into them is verified and is actually actionable. It is not, you know, duplicate is not matched incorrectly from the supply chain itself. Another stat, customers have seen 90 percent average on time reporting, so that if you need your system, you know, if you need your channel data at a certain period of time, say you want emissions channel data two weeks before the end of your quarter so that your teams can then incorporate that into your analysis of carbon emissions and put an update this into your ESG report. This is an area where if you need accurate on time data our customers, you know, this has been a 90 percent improvement. We have a couple of a couple other ones as well the same thing on the on time reporting. Many times our manufacturers they get data from the channel they were getting on a quarterly basis. When they come with us, we can move them from quarterly to monthly, and to daily partner reporting. And when you have all this data it helps you, like it has, like I said, the visibility and control. And after implementing a channel data management program some of our customers have also seen a 50 percent increase in distributor compliance. And when I say distributor compliance, that means if a company is supposed to be selling a certain product in a certain region in a certain or bundled with a certain thing another, another component, they're complying to that. They're not going to be, you know, selling from Turkey to Iran when they're not supposed to for example. And the list kind of goes on and on, but I don't want to. We have plenty of them on our website and I, I, I'd implore, you know, if you are interested to learn about it through Model N. com.

Tom Raftery: 31:51

Okay, cool. We're coming towards the end of the podcast now, Chris, is there any question I didn't ask that you wish I had or any aspect of this we haven't touched on that you think it's important for people to think about?

Chris Shrope: 32:04

Yes. I love this topic. I wish we could talk about it all day. And, but I do think there's a, there's a huge opportunity for companies to leverage channel data and leverage it to achieve their sustainability goals in their supply chain or for their business in general, whether it's reducing emissions, reducing the amount of inventory in the channel over production under production issues. How you choose who you do business with by vetting them, auditing them, having, you know, scorecards. But I think like I had mentioned, like at the beginning, 80 percent of companies see sustainability as a potential revenue and profitability driver. I think that revenue and profitability needs to be brought more into this conversation. If we're, like I said, if every single thing that we do, every employee, every practice that we do is supposed to drive value for the business, but we only have this small fraction to capture that we should include those, those companies, because they're doing things today, like channel data programs to collect collect this critical data from the channel. They're running incentive programs. And I think an interesting thing that may be a future podcast, right, topic is how can I put together incentive programs or add an additional condition on to an incentive program for sustainability channel data so that you know, say you have a, you have an incentive program out there from your distributor to send a certain amount of data. Well, if they added an extra couple of parameters from what they have from their logistics software and bring that in. They, maybe they get an extra 0.2 percent on that rebate, right? And 0.2 percent on a million units can be a lot. And so I think there's an opportunity to saying, let's, let's, let's bring everyone to the table, including the revenue teams to help solve the sustainability challenge.

Tom Raftery: 34:21

Cool. Okay, great. Something to think about, definitely. So Chris, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Chris Shrope: 34:33

Sure, certainly. You can follow me or connect with me on LinkedIn, Chris Shrope. Be more than happy to chat.

Tom Raftery: 34:43

Superb. Great. Chris, that's been fascinating. Thanks a million for coming on the podcast today.

Chris Shrope: 34:49

Pleasure.

Tom Raftery: 34:50

Okay. Thank you all for tuning into this episode of the Sustainable Supply Chain Podcast with me, Tom Raftery. Each week, thousands of supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose the guests or a personalized 30 second ad roll. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn, or drop me an email to tomraftery at outlook. com. Together, let's shape the future of sustainable supply chains. Thanks. Catch you all next time.