Supply chain is going to carry a great degree of responsibility you know, within the sustainability footprint and I do think AI will definitely provide great benefit there. It already is looking at, making stronger recommendations, shortening lead times and cycles and optimising supply chain and routing. Just have to make sure always that the cost does not outweigh the benefit. Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 57 of the Sustainable Supply Chain Podcast, the number one show focusing exclusively on the intersection of sustainability and supply chains. I'm your host, Tom Raftery, and I'm thrilled to have you here. A huge thank you to this podcast's amazing supporters. You make this podcast possible. And if you're not a supporter, but you'd like to join this community, support starts at just three euros or dollars a month, which is less than the cost of a cup of coffee. And you can find the support link in the show notes of this or any episode or at tinyurl. com slash SSC pod. Now in today's show, I'm delighted to be talking to Shannon Payne from MDSI. And in upcoming episodes, I'll be speaking to Mickey Vanderloo, who's the founder of Lakeview Consulting, Klaus Bretschneider from Lynx AS, Kenny McGee, CEO of ComponentSense and Andrew Hargest, founder of Supply Club. But as I mentioned today, I'm talking to Shannon. Shannon, welcome to the podcast. Would you like to introduce yourself? Thank you, Tom. Definitely appreciate you having me. My name is Shannon Payne. I'm Senior Vice President of Supply Chain Solutions at MDSi Okay. And what is MDSi, Shannon? Well, I guess first a little bit of background. I actually graduated university in accounting and started off my career working for Turner Broadcasting doing accounting and license management for all of the Turner movies and cartoons that he owned. So I kind of called it cartoon accounting when I first started out. But did that for a few years and then went and worked for an IT consulting company where we developed and implemented mid market ERP accounting applications for all different types of industries. So basically got a good background of accounting and IT, and then joined MDSi in 2003. And really started focusing on supply chain. And so MDSi or Management Data Systems. International is we really provide innovative solutions to support IT infrastructure and high capacity networks within our customer base. And so what that means? IT Solutions is we really deploy infrastructure, we deploy networking solutions and tools to support data centers, to support delivery of wireless signal and broadband solutions. So MDSi really grew up in the telecom and service provider space. So what that means is we support the customers that are really delivering the internet. They're delivering IT and networking solutions to either businesses or to consumers across the globe. When I joined on MDSi had a vision and I was really tasked with building out tools that would really marry and support streamlining forward and reverse logistics. So helping these IT companies and these companies that really embraced and utilised and delivered technology to be more efficient in how they were able to deploy technology solutions But then also how they were able to retire and handle reverse logistics for legacy technology assets. Okay. And before we dig into that too much, I'm curious, what has surprised you most on your journey from being a cartoon accountant to where you are today, leading supply chain and MDSi. That's a great question. I think probably the most interesting aspect was when I joined this industry, we were dealing with a lot of very, very large fortune 500, 1000 type organisations, and I was surprised at the fact that I figured that they would have very detailed systems and processes for management of assets, especially the technology assets. But came to find that most of these companies had very, very detailed processes for procurement and for handling ingesting new technology, new assets, but they really hadn't built tools and infrastructure and streamline processes surrounding assets through their full life cycle. So jumping into this industry definitely found that organisations needed a partner, or needed, assistance or solutions in managing untethered assets or assets that were not installed on their network, but also, assistance in managing that back end of the supply chain. And, until very recently, it's gotten a name of sustainability, but it really has been living and existing in a different name or format for a number of years. And, it's been very interesting in that technology has had a chance and it had a much longer useful life over the, you know, the past 20, 30 years ago. I joke around that when we definitely find certain companies that are pulling out equipment that I feel was used to support the first space shuttle launch. They were getting 15, 20 years of useful life out of technology assets. The world has changed. Technology has changed so much now that realistically, there is a technology refresh or a change probably every three to five years. So it's becoming more much greater requirement for companies to have methodology and have good practices in regards to handling not only the new technology deployment, but also what is happening with all of this legacy equipment that's being pulled out. Yeah, yeah, fair, fair. And, obviously, I mean, you mentioned sustainability and this is the Sustainable Supply Chain Podcast. What do you see as the most impactful actions companies can take today to reduce their carbon footprint through supply chain management? So I think it's twofold. So one it's estimated that by 2030, that 20% percent of all of the electricity and energy consumed will be in support of delivering IT solutions or providing IT to the masses to the globe. So one of the key initiatives now is for companies to find and deploy technology that has a reduction on carbon footprint that is more efficient in regards to electricity consumption that reduces heat dissipation. Companies are definitely taking a look and are very, very focused on that from a sustainability and from a carbon footprint perspective. So supply chain works hand in hand with that because companies need to be able to have a better, stronger, faster way to get this new technology deployed. So one of the things that we focus on at MBSI is how can we assist companies with this transformation faster. So we really approached that by assisting them with pre configuring equipment, making sure that everything is tested, bundled, ready to go for deployment out to the sites. To where it can cut down really time to market time to revenue, time to profitability, but also time to taking advantage of these energy efficient solutions. Really require kind of a chain of custody management with deploying these hundreds of thousands of assets, there are a lot of handoffs along the way to technicians, engineers, trading partners to go through and deploy and install this equipment. So there are many situations where projects get delayed, they get put on hold, they get canceled. So you have stranded assets throughout this footprint. So we've definitely focused on making sure that we're assisting with visibility to these assets throughout their life cycle, throughout their deployment. That way, Hey, companies aren't purchasing new equipment that they don't need. Helping them with CapEx reduction, so that they can again get the best economic utilisation of the assets that they own. So on the front end, that's one of the key elements of sustainability. Certified pre owned, auto companies will lease a car for three years. They bring the car back in, they test it, they refurbish it, they make sure everything's good to go. And then they'll sell it as a certified pre owned vehicle. Same thing in the technology space. Some companies will lease out equipment or they have trade in programs to where they can get reutilisation of these assets. The nice thing about this is customers are buying it at a lower price. It frees up capital dollars to invest in these new technologies that provide all of these energy saving benefits. But we've definitely seen a massive growth in that and adoption by the industry over the last, probably 5 to 7 years. So is that because, companies are doing that three to five year refresh, as you mentioned, so is that kind of a reverse logistics angle where they're taking the old equipment out, slotting in new, more energy efficient equipment, as you mentioned, and then the old equipment that they take out, that's the stuff they're using to then create the certified reconditioned product that they either use internally themselves or that they pass on to and sell on to other people. Is that what we're talking about? Yeah, definitely. and they're probably two elements of the reverse logistics and reuse. And so one of the things that I was tasked with at MDSi was really streamlining the reverse logistics process. Most all companies have defined processes for forward logistics. Purchase something, implement it, away we go. But on the reverse logistics side, because you're dealing with so much excess equipment, the key element is really triage. I have all of this equipment that's coming out of networks, coming out of data centers. What can we do with it? So the first element is identification and triage of these assets. What has value that I can still use someplace within the company. And then if not, what has potentially trade in value back to the manufacturer? And then finally, if there's no value to it, how can we recycle this in accordance with environmental standards to, turn this back into raw materials that can be reused? The key element, and especially, you know, we've been doing this, like I said, built out the solutions probably 10, 15 years, but during the pandemic is a great example. Companies had supply chain issues in getting new technology. So had to be creative and look at, it may not be the latest, greatest technology, but it may be N-1, N-2 revision of technology. How can we streamline getting that back in, in a usable state, redeploying it. So we've probably in the last five years seen a 12 to 15% increase in reuse within a company, over that time frame. And then, definitely going back into then equipment that is certified and reused from the manufacturer. We did a case study with one of our customers and so they identified an 80% emission reduction through using a certified reconditioned product. And that's through, manufacturing emission reduction, transportation. By doing certified reuse, you basically get 85% less use of raw materials. In the technology industry, there, they're just massive benefits and adoption of that because everyone is focused more on sustainability. And then they find that, it does have great benefit from a cost reduction perspective, but also freeing up capital, you know, it's not like they're taking this capital and just not using it. Now they can focus on, hey, let's use this in expansion areas of our network. In growth and definitely in more energy friendly solutions that they can deploy. And obviously reverse logistics is very complex, a lot more so than forward logistics. What are the biggest challenges you see companies facing when they're trying to manage reverse logistics and how can they overcome them? Well, I will say one thing. Typically the reverse logistics is not fun and it's not sexy, right? A lot of times people are looking at it. This is a cost. I've got new equipment that needs to go in. But you know, a lot of times people either don't budget for the reverse logistics you know, taking out the old assets or it's an operating expense. So we've seen certain companies that, in order to take advantage of power and cost reductions, they will retire assets in place. They'll retire them and turn them off, leave them there until they need the space. Right? And so we've definitely seen over the past few years. Now, after coming out of the pandemic, people are really investing and putting more back into their data centers, into their switches and their networks. That we've seen a huge uptick. Probably we saw a 200% increase in harvest and recycling activity from 2022 to 2023. And so, probably the biggest struggle is just, having focus on that and having a streamlined process. And that's where we've really built our solutions to come in because a lot of it is identification going in, actually decommissioning the assets. And then one of the things that we try to focus on is for assets that don't have any value. It doesn't make sense to ship these things all across you know, across the countries. Let's try to identify and find the best location to recycle equipment that is no longer needed so that you're really reducing your carbon footprint, carbon emissions, not trucking junk, if you will all across continents to ultimately be recycled. So what can we do to handle that in the most cost effective and carbon neutral manner in handling that technology. But, you know, there definitely is a good need for that equipment that can be used. So it's trying to do what we call triage at the edge. If we can identify what is there, what's coming out, what's available, figure out the best use at the moment of truth so that we can route that equipment, that drives the best economic value. Yeah, it's not quite the same model, but I'm reminded of, and this is a B2C example, I'm reminded of Apple. When you go to buy a new phone directly from Apple, for example, they give you the option of sending them back your old phone and they give you a refund on it. And they have a whole system in place where they'll ship you the new phone then they'll ship you a box to send back the old phone in and when they receive it back and when they see the state it's in, then they'll give you X amount of euros or dollars back based on the status and they'll tell you ahead of time if it's in good condition we'll give you this much if it's in less good condition we'll give you Y amount. So not quite the same I get, but it is, I think that's a model that can introduce people to the idea of reverse logistics if it's something they're unfamiliar with. Yeah, That's a very great analogy. And in this case, you're definitely talking about much larger, almost at times refrigerator size racks and cabinets of equipment. But it is the same, principle. It's how can we drive as much economic utility out of these existing assets as possible. And then with whatever is left over, let's make sure that processing it in accordance with environmental standards and utilise and turn these precious metals, the metal plastics, anything we can back into raw materials for new production of technology equipment. And so. But very, very similar, just on a much, let's call it a larger scale in regards to mass of equipment. One of the, next things I was going to mention is really with technology changing and the onset of AI, there really, really is a great need and demand for you making sure that this is being approached, in a thoughtful manner. AI from a sustainability perspective is really kind of a double edged sword. AI can provide amazing analytics and recommendations. And I think in our industry, we were just talking about. It will make recommendations of, hey, when should we replace out a piece of technology to put in something that's newer, more energy efficient can can provide more capacity and bandwidth? But conversely they're saying by the end of the decade, that energy requirements due to AI are going to grow by about 160%. So, you know, it's been estimated that an AI search requires 10 times the energy of a normal Google search, if you're just looking for something on the internet. So that's the double edged sword. There's going to be a massive energy demand. So it's going to be key to be deploying new technology, to make sure that, again, this can be handled and provide all of the great benefits that AI can bring, but that is sustainable is you know, not driving massive energy increases, as a cost in order to support those benefits. And do you see this increasing importance of AI driving down the refresh cycle, which is currently three to five years down to maybe two to three years. I think that's a great question. I think you could see a good use of churn. Then again, I think just for mass, I think there is probably going to be a lot of use of lesser technology. One of the things we've seen over the past few years is there were a lot of companies that were purchasing legacy technology or networking equipment in order to harvest and mine for Bitcoin or for crypto. And so I think people definitely get creative in regards to use and, looking at alternate ways to use legacy equipment. So hopefully that can be the same within, the growth of the AI footprint. And of course, as you rightly said, it is a double edged sword AI in that it should also help come up with better solutions. For example, one of the solutions out of DeepMind Google's division, DeepMind is called Alpha Chip. And Alpha Chip is an AI, which specifically is used for developing chip designs for AI. So now you have AI designing chips to make better AI, which will then be powered by these new chips, which will then design. So it becomes a, you would hope a virtual circle. Yes, an AI circle. So, yes, it's definitely going to be interesting to watch where everything progresses over the next 5 to 10 years. but that's where I do believe that that supply chain is going to carry a great degree of responsibility within the sustainability footprint and I do think AI will definitely provide great benefit there. It already is looking at, making stronger recommendations, shortening lead times and cycles and optimising supply chain and routing. Just have to make sure always that the cost does not outweigh the benefit. Yeah. And you referenced the pandemic and how it caused major shifts in how IT infrastructure is deployed. What kind of long term impacts have you seen if any, and what trends do you see emerging as companies adapt? Obviously there was a great change in regards to capacity and really, people had to grow networks in different areas, more people working from home. So you had massive capacity requirements in broadband and that's where, definitely people embraced reuse of technology during that time frame, especially while you were having problems getting chips developed, getting new equipment in. And I think that that delayed a lot of circulation and growth of Infrastructure of new infrastructure. But now, coming out of it, we're definitely seeing rapid, rapid growth deployment across the board as the workforce is balancing back out to home and office. So, you know, I think it definitely is naturalising right now. Okay and what about the future of reverse logistics itself? Where do you see it heading in the next five to ten years? Are there any innovations or trends that you think will define its future? I think that, with new technology, a lot more, AI and with a lot more visibility and discoverable assets on networks in our industry, I do think that there's going to be, quite a bit of more targeted, even further edge decision making just because, people are going to know and be able to look at either do we need to regionalise and migrate assets into different areas? I do think that, just with the cycle of refresh of equipment, I think you're going to see a lot more equipment on the reverse side being taken out and targeted for other areas within companies. You know, so it's almost, Hey, we go to the newest technology, then tier two is going to get the older, it's almost hand me downs from your siblings. Um, But As you were saying that I was thinking of, you know, my getting a decent phone and then in three or four years, giving it to one of my sons and then giving it to the younger brother, same kind of idea. I think really where you're going to see it is more with the, manufacturers. I think that they we're seeing more and more embracing of certified and of reuse equipment through the manufacturers to where they are continuing to provide different opportunities and solutions of the equipment and really incenting the customers to trade in that equipment so that they can upgrade their technology, but then, these companies are, still finding value out of these legacy assets. Okay. Very good. in terms of metrics or KPIs, do you have any metrics or KPIs that you think companies should focus on to measure the success of their sustainability initiatives? That's a great question. And one of the keys I was going to mention is we always say that you can't manage what you can't see. So it is vital to have reporting and analytics and metrics on what is happening, both from a reverse and forward perspective. Key metric indicators are how much equipment really is being harvested out by, region location. Who are the adopters? We actually even track. Who are the adopters? Who are the users? So, companies will see either different departments, regions, they're providing more in other areas are potentially consuming more equipment. And then really, what, what is the ultimate utilisation that they have for legacy assets? How much were we able to trade in and provide cost reduction? There are a lot of companies that are starting to look at energy savings by making it a migration to newer technology. We were able to reduce energy costs by X%. So I think some of those are industry or key elements and indicators that they're wanting to look at, especially energy consumption. That's one of the keys Okay, and do you think with the increasing focus on sustainability and even more so on circularity, this would be an area that will become increasingly important for organisations to consider? I definitely do. And you see it across corporations all the time. There's chief sustainability officers we're being required to report really how much equipment is being recycled. So how many metric tons by different categories. So again, while companies have always kind of had a focus on it, it really hasn't had that sustainability name. Now, it really has a targeted focus and influence where everyone is truly looking at, hey, how can we reduce these emissions, our carbon footprint as well as you know, making sure what are we driving back into recyclables. So I think you're going to continue to see this grow in the IT, in the infrastructure sector telecommunications sector, but also you're seeing it through retail, through health care, all of the different verticals, financial everyone definitely has a key focus on sustainability and IT is a huge element of that. Yeah, no, no doubt. What's one piece of advice that you'd give supply chain professionals who want to drive more sustainable practices within their organisations? To be honest there, some of it is work, work with your IT groups. I think your IT professionals within the organisation are a great resource in regards to learning. Hey, what, what are our technology plans? What can we do to go through and give more visibility to assets across the entire footprint, both in your direct operations, as well as in your infrastructure. So I do think that a lot of times looking to IT can be a wealth of knowledge. And then, really either develop a, targeted practice internally or potentially look to a partner just to build out a reverse logistics process that fits right for your organisation. Because again, a lot of times, reverse logistics is an afterthought. It's, you know, definitely stepping up into more focus. But, find a company that can help you in defining and writing process and procedure that says, okay, Hey, as we do this as part of a new deployment planning methodology, we need to figure out what's our reverse logistics plan practice for any type of legacy assets. Okay, left field question, Shannon, if you could have any person or character alive or dead, real or fictional as a spokesperson for sustainable supply chains, who would it be and why? Wow. That's a, that's a good question. I may not actually go with a specific person, but, but from our industry, I think I would want to point out two organisations that I think really have taken on and addressed sustainability in the IT infrastructure sector. And those would be Cisco and HP Hewlett Packard. They both have probably the most mature reuse certified recondition redeployment, you know, type programs in the industry. And so I definitely applaud them on really how they've attacked and found benefit both for the customer as well as themselves. And it really, really drives a good sustainability practice in our industry. Yeah, no. And again, I know I've mentioned Apple a few times, but you can as a consumer go to the Apple website and buy reconditioned or renovated devices that they are selling, direct to consumer as well. So this is something that's penetrating both the consumer and the B2B side. So I think that's great for raising consciousness of these kinds of things. We are coming towards the end of the podcast now, Shannon, is there any question I didn't ask that you wish I did or any aspect of this we haven't touched on that you think it's important for people to be aware of? I think you asked at the very end, you know, what was the key? And to me, it really is reporting and metrics. You have to have some kind of structure to, be able to work and validate what type of equipment are we pulling out? What should we be doing with this equipment? So managing it, really having a good structure of metrics that fits your industry that aligns with, hey, how can we optimise new deployment, but really on that reversal just excite. How do we triage equipment to where we're reducing touch costs and making sure that we're, really handling equipment assets appropriately. I always talk about drive. I can drive as much economic utility as you can out of existing assets. So I'm really focusing on the metrics there. I think that's the key message. Okay. Shannon, 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? Sure. They can go to our website, which is www dot MDS I I N C. So MDSI inc. com and look me up on LinkedIn. Superb. Great. I'll put those links in the show notes as well, Shannon so everyone has access to them. Shannon, that's been really interesting. Thanks a million for coming on the podcast today. Tom. Thank you very much for having me. I appreciate it. 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.