S2E8: Sustainability in Manufacturing with WestRock’s Peter Anderson and Philips’ Jeff DiLullo

For our April episode, co-hosts Ted Stank and Tom Goldsby were live at the Spring 2024 Supply Chain Forum speaking with Peter Anderson, chief supply chain officer for WestRock, and Jeff DiLullo, chief region leader for Philips North America.

Both Anderson and DiLullo are senior industry leaders and members of the GSCI Advisory Board. Together with our hosts, they discuss all aspects of sustainability in the supply chain, including carbon footprint, scope emissions, regulatory practices and their influence, technological innovations, and more.

The episode was recorded live at the Marriott Knoxville Downtown on April 10, 2024. Watch the video of the episode.

Related links: 

• U.S. economy adds 303,000 jobs in March, unemployment down to 3.8% 
• Inventory expansion, more efficient us of warehousing and transportation drive economic activity in logistics sector 
• Inflation remains a concern as March consumer prices come in above expectations 
• Manufacturing activity contracts in February following 2.5 years of growth 
• Sustainability at WestRock 
• Sustainability at Philips 
• Professor Alex Scott talks sustainable logistics and future-proofing supply chains on the Sustainable Supply Chain podcast 
• Become a Supply Chain Forum member 
• Subscribe to GSCI’s monthly newsletter 
• Read the latest news and insights from GSCI 

Text the Tennessee on Supply Chain Management team!

Episode Transcript

Introduction (00:00):
Welcome to the Tennessee on Supply Chain
Management podcast.
Listen in as co-hosts Ted Stankand Tom Goldsby set sail into
the world of end-to-end supplychain management, diving deep
into today's most relevantbusiness topics.
They'll share insights inpressing industry issues and
tackle the challenges keepingsupply chain professionals up at
night.
If you're enjoying the ride,download and subscribe to

(00:22):
Tennessee on Supply ChainManagement on your favorite
podcast platform now.

Tom Goldsby (00:27):
So hello and welcome to another edition of
the Tennessee on Supply ChainManagement podcast.
I'm your co-host, Tom Goolsby,joined by my good friend Dr Ted
Stank.
Hello, Ted, How's it going?

Ted Stank (00:37):
I'm going well, thomas, thank you.
Did you know we're in front ofa live television audience?

Tom Goldsby (00:41):
Are we really?

Ted Stank (00:42):
Are we really Listen?

Tom Goldsby (00:43):
to them.

Ted Stank (00:43):
There you go so you can tell them yeah, all right.

Tom Goldsby (00:46):
We want you to be alive.
This is awesome.
Hey, Ted, you know it's alwaysgreat to be a Tennessee
volunteer, but you know,mornings like this it's
particularly special, isn't it?
I mean, I've got my smoky dogsocks on and we're surrounded
here.
Just a little bit of context ofthe Supply forum spring edition
.
I work expecting 700 guests,about half of which are students

(01:07):
, alums and faculty, and thenthe other half coming from
industry far and wide.
So it's just great if you allout there in podcast listening
world just imagine it thatyou're being surrounded by 700
of our good friends here atrocky top and you know if they
all downloaded this episode,because they're here, our
numbers have instantly gone up.

Ted Stank (01:27):
Maybe we'd get some sponsorship.

Tom Goldsby (01:30):
I love it.
Let's have those conversationsright after the podcast.
In addition, we should probablypoint out our guest, ted, you
want to introduce our guest?

Ted Stank (01:36):
Yeah, let me introduce our guest.
Many of you know these twofolks.
They're good friends of ours.
Similar to PTI, we like to havefriends come on as our guests.
We've had people contact us sayhey, I'd like you to have this
person on as guests.
We're like no, we only wantfriends on, because eventually
we want to do this at theTennessean with smoked old
fashions when we do this.
So that's where we're going togo next with the podcast, but

(01:58):
let me introduce our-.

Tom Goldsby (01:59):
That might be our final podcast that might be, so
we might want to think aboutthat.

Ted Stank (02:03):
Notice we didn't say that when Randy Boyd was in the
room.
Peter Anderson, chief SupplyChain Officer of Westrock, been
friends of ours for a long time.
He's worked for a number ofcompanies, both consulting
companies and manufacturingcompanies, in the past and has
vast knowledge of all thingssupply chain, all things
leadership.
Great to welcome Peter with uson this podcast.

(02:23):
Our other guest is Jeff DeLulo,chief region leader for
Phillips Products.
Jeff, this is your secondpodcast with us and I think
we've been told, if Brian's inthe room, that your last podcast
was our most popular podcastever.

Jeff DiLullo (02:38):
Definitely you and Tom.
No challenge, no pressure Breakit.

Ted Stank (02:41):
Okay.
So our two guests we're goingto get them to do an
introduction of their companiesin a minute and then talk about
some of the sustainabilityinitiatives that they are
implementing.
This really evolved from ourlast forum back in November,
when we had a session onsustainability and these guys
grabbed me out in the hallwayand were like, hey, we're doing
amazing things in sustainability.
You need to get us on.

(03:03):
And about a week later I saidbe careful what you ask for,
because I'm going to ask you tobe on a panel and we'll do a
podcast on it.
So, tom, before we launch intoit, let's let Jeff and Peter
kind of give us a little introto their companies.
Then let you and I review someof these new economic statistics
and then jump intosustainability Sounds good.

Jeff DiLullo (03:20):
All right, maybe I'll start Philips Healthcare.
We're a Dutch-based company 18billion global revenues, about 7
billion of that is in the US.
It's a 130-plus-year-oldcompany that has really been
known for innovation and got itsroots really in consumer
electronics, and about 14 yearsago we made the choice to move
to a pure health tech concern.
So we spun off about two-thirdsof the company about $50

(03:42):
billion so that we couldconcentrate purely on improving
people's lives with med devicesand med technology.
So that's been our journey.
We live and breathe by ourmission.
It's to improve lives throughhealthy living.
Two and a half billion peoplethis decade reached to include
in our mission statement 400million in underserved
communities.
It's part of our charter to doeverything we can for design and

(04:04):
innovation to reach people thatwould never have access to
health care that you have inthis room today.
Some of our products includeanybody had an MRI ever Big,
clunky, clinky thing?
Yeah, 10,000 pound magnet.
We do everything from an MRIall the way through hospitals.
If it's equipment that helpssave lives, we do most of it and
one of the leaders globally inthat.
And then Sonicare toothbrushes,norelco razors Anybody have

(04:29):
those.
So that's all the way down toconsumer, because we believe
in-home habits are the formularyfor better healthcare and
prevention of care.
The last thing I'd say for ourcredentials is Philips.
We've been committed as a Dutchcompany, so there's a bit of a.
Europeans are quite a bit aheadof Americans in terms of
genuine sustainability effort,but for us, we've been carbon

(04:50):
neutral since 2020.
100% of our operations are fromrenewable sources of energy and
we have 50% of our supply chainis sourced from like-minded,
science-based target providers.
We've been recognized by Forbes, fortune, wall Street Journal
as one of the top health techsustainable companies in the
globe and we activelyparticipate on the

(05:12):
administration's sustainabilitytask force and we were the first
health tech company to sign upon the sustainability charter
with Health and Human Servicesto try and evangelize the value
of sustainability to increaseaccess to care in North America.
So we're pretty active in ourgovernment affairs as well as
just our provider network, whichis mostly hospitals that you
would go to.

(05:32):
So that's a quick about us,peter.

Peter Anderson (05:34):
How can I follow that?
Jeff?
Try, peter, give it a try.
How many people in the room aresuppliers or customers of
Westrock?
Oh, I've got a lot of convertshere.
We need to convert.
So Westrock is the largest paperand packaging company in the
world about 21 billion revenue.
Our purpose says everythingabout our approach to

(05:55):
sustainability.
It's about innovate boldly,package sustainably.
And when we talk aboutinnovation and boldly innovating
, it really is about what we cando to make the environment
better.
It's about what we can do tomake better recyclable packaging
.
I feel so proud because Iactually get to manage the
supply chain of a truly circularcompany.

(06:15):
I have everything from takingwood from forests right the way
through making paper with it,putting it into boxes,
everything you pick up every day.
I'll lay a bet with youTomorrow when you get taking
things out of the fridge at homeand that I bet you touch 20
Westrock products before the dayis out.
That's how pervasive all of ourproducts are.

(06:38):
But we want them to be recycledas well, and we have recycling
facilities.
So we have a truly circularloop, a closed economy around it
, and now we're trying to getmore people involved in that so
we can actually make it evenmore circular than what we have
today.
But the US is where weprimarily are.
Huge presence here.
A little over 300 factories,300 warehouses in the US.

(07:03):
So big presence.
Tom Ted, thank you for invitingus along.

Tom Goldsby (07:08):
Thank you so much for being here and we're going
to circle back to you here injust a moment.
But, ted, you want to have alittle back and forth about the
latest news and notes and supplychain.

Ted Stank (07:16):
Yeah, let's just spend a couple of minutes on
that, because I think one of thethings that we bring value-wise
in our podcast is just to kindof put some of these economic
statistics in front of us thatimpact the initiatives our
companies pursue, whether it'sin hiring or new initiatives or
investments, and those thingsare pretty impactful to us in
the supply chain.
And then we'll pivot tosustainability.

(07:37):
But if I'm going to summarizethis as a supply chain manager
and not an economist, I'm goingto say that almost all our
statistics are showing that theeconomy is starting to burn
again.
Manufacturing starts are up.
The logistics managers index,which tracks activity in
transportation and warehousingand inventory, are up.
Purchasing managers index, inboth services and manufacturing,

(07:58):
are up, which tracks howconfident purchasing managers
feel about going out and buyingnew inputs because of
initiatives.
Jobs the jobs report came outlast week.
I think they were expecting180,000.
It hit 303,000.
So again, heating economy,although we have some MBA
students who are incrediblytalented that need jobs, so

(08:18):
they're right over there.
So a lot of things showing thatthe economy is kind of heating
again.
Just today, while we were inhere in our first session on AI,
the latest inflation numberscame out and guess what?
3.5 percent.
It's up 0.4 percent fromFebruary, up 0.3 percent year on
year from February.

(08:39):
So lots of implications thatinterest rates are probably not
going to come down in June and,as a result, tom just told me
that the stock market's notdoing very well, yeah, my wife
pinged me via text and said haveyou seen what's happened to
your retirement account?

Tom Goldsby (08:52):
So I, like so many people, I'm extending it out,
waiting for that market to comeback.
And it will.
It will, I'm very confident itwill.
But you're right.
A lot of very strong, robustnumbers.
I continue to be perplexed,really, by how the analysts
continue to be perplexed, I meanmonth over month.
You know they come in here andthe numbers come in, you know,
above it, do we have any?

Ted Stank (09:14):
financial analysts in here.
You know, one of the thingsthat really bugs me about
financials is that you can betagainst us doing well and then,
when we do well, it hurts usLike come on, I mean at least in
supply chain.

Tom Goldsby (09:25):
When we have, you know, an exception, then we
overshoot the next month, right,and then you know, over course,
correct.
But yeah, no, no, red hot.
And yeah, it's on that newsthat inflation's up, that we can
expect maybe those interestrates to come down, maybe a
little later in the year, maybenot quite so much as expected,
and that was already starting totemper last week.
I think it was the MinneapolisFed chair who opened his mouth

(09:48):
and said yeah, I wouldn't expectthat to happen quite so soon.
So the market was taking alittle bit ahead last week
before the-.

Ted Stank (09:55):
Since we have two senior leaders here, how are you
seeing all this economicfluctuation and interest rates
impacting your initiatives?
Are you having a hard timegetting capital?

Peter Anderson (10:08):
No, not at all, ted.
I mean it really is interesting.
We've got a bit of thisdichotomy because we have
industry out there talking aboutthings are going to start
bouncing back in quarter two,yet now the latest reports came
back and said quarter two isgoing to be flat.
It's now going to be quarterthree, quarter four before we
see a rebound.
So I've got to admit I'm nottaking bets on economists at the
moment.

Tom Goldsby (10:26):
It's the micro versus macro view.
There it is yeah.

Ted Stank (10:30):
Can I tell a relatively off-color joke?
Somebody told me once aneconomist or somebody that had
to make love a thousand ways buthave never been on a date.

Tom Goldsby (10:38):
Another one.
You know, while we're riffingon economists and I'm an econ
undergrad myself, so I kind ofthrow myself under the bus here
but if you were to lay all theworld's economists end to end,
they would never reach aconclusion, and so that's why it
takes us to interpret thisstuff right.

Ted Stank (10:58):
And I heard Randy Boyd say supply chain management
is everything, so let's justtake over.
Okay, it is everything, solet's just take over.

Tom Goldsby (11:04):
Okay, it is everything.
But you know, with that in mind, if we kind of make a bit of a
pivot to the sustainabilitytopic and I got to admit you
know, sustainability has been apassion for me personally for a
long time Do you remember, stank, when you were on my committee
at Michigan State back in 1997,a new faculty member at Michigan
State and I said, hey, I'd likefor you to be on a dissertation
committee and I kind ofexplained what that meant and

(11:26):
fortunately you signed up Soon.
Thereafter we did a survey onenvironmentally responsible
logistics.
Do you remember that, which Ithink is still a kind of an
underappreciated article thatwas out there.
But something else that wasunderappreciated was that one
survey that came back, ted.
Do you remember that one?

Ted Stank (11:41):
Yeah, these were still back in the days of paper
surveys, right?
So we're mailing out surveysand getting them back, and one
of them came in, folded up andhad like ink writing all over it
, and it's like you liberalprofessors, we know where you're
trying to go with this.

Tom Goldsby (11:55):
And it wasn't just that, the message in words.
Right yeah, there was anoutline and I won't be graphic
here, but an outline of a handand then a projection somewhere
in the middle of a hand, and itcame back around.
We got the message and wecounted the data point, I think
as well we didn't throw it out.

Ted Stank (12:12):
Did we use that as part of the?

Tom Goldsby (12:12):
survey.

Introduction (12:13):
I think we can't keep it in the sample.

Tom Goldsby (12:14):
But anyway it's been a passion.
My dissertation was on consumerrecycling.
Before it was cool.

Ted Stank (12:20):
Yeah, and we were in Michigan where recycling of cans
has been a big issue for a longtime.
It's a 10-cent deposit rule andthey have approved closed-loop
distributors to bring it back tothe cleanest most pristine
roadside in America right thanksto that dime deposit.

Tom Goldsby (12:36):
Now, when we first moved to Michigan, mrs Goldsby
goes shopping a grocery storeand she sees an advertisement
for 12-pack of soft drink.
Grocery store and she sees anadvertisement for 12 pack of
soft drink and she goes to thecheckout and they ring it up at
the sales price plus 12 times 10cents and she's like what kind
of scam are you trying to pullhere?
You know, and she didn't takethe purchase, but anyway we came

(12:56):
to appreciate it.
But it's been a passion of oursfor some time and a lot of our
faculty and students are veryimpassioned about it here in the
year 2024.
We offer coursework in it.
I've been working on a book for12 years in sustainability
Finally put the last chapter tobed.
Now we just need to updatechapters one through 11.
A lot's happened in 12 years.
I can't believe the publishersstayed with us.

(13:18):
But as you think about the world, I think of what the Procter
Gamble chief sustainabilityofficer I interviewed way back
when we were starting the bookand he said you know, the way we
kind of look at it is we breakour market up, we segment, which
is something we teach andpreach and use a lot of
different criteria.
But he said you know, we've gotthe evergreens that are perhaps
willing to seek out that greenproduct, perhaps even pay a

(13:41):
little bit more.
They might even have somedifferent performance
expectations for that product.
Be willing to pay a little bitmore for a little bit less.
Then, meanwhile, most everyoneelse is somewhere in between.
You know, altruistic, they wantto do the right thing.
You got to make it easy.
But then there's also theso-called never greens that you
just can't.
You know there's just no wayyou're going to bring them over,
and so it's.
I think that's where we arestill Some years later.

(14:03):
It's a mixed bag, but you gotto somehow resonate.

Ted Stank (14:07):
So I just did a little bit of digging before we
started this panel and I foundthis McKinsey report from a year
ago that said that traditionalsupply chain strategic focus was
on service cost and capital andquality.
Today, the new normal is thosethree plus resilience, agility
which we could have otherpodcasts on and sustainability.

(14:30):
So for these guys up here,their job 10 years ago was on
service, cost and capital andquality, and today their
executive boards, their boardsof directors, are asking them to
also be responsible forresilience, agility and
sustainability.
So I'd like to use that as ajumping off point to get you all
to start talking about whatsome of your initiatives are and

(14:52):
really, what are the thingsdriving that, the motivators
driving those sustainabilityissues?
So, peter, you want to start usoff about some of your
initiatives I'd love to.

Peter Anderson (15:01):
I'm going to be politically incorrect to start
with.

Ted Stank (15:04):
Do you know what In Europe we?

Peter Anderson (15:05):
thought about sustainability more than 10
years ago sustainability morethan 10 years ago and you know
what?
I'd love to bring the practicesnot all of them, by the way,
just some of them from asustainability practice to the
US, and we struggle day in, dayout around it.
And that comes back to some ofthe initiatives.
Sustainability is not a choice.

(15:26):
Every one of my customers wantsus to report on it and it's the
right thing to do, so you don'thave a choice now.
It's how you attack it.
What do you do, how do you takesuppliers, customers and others
on that journey with you?
So we have a holistic approachto it.
I mean, Jeff and I were talkingabout it over the last couple

(15:46):
of weeks and it really is abouthow do you create a network.
So a lot of our initiatives areabout how do we connect with
others to actually drive abetter, sustainable solution.
There's an awful lot around howwe manage our facilities,
investments in new equipment,how we think about logistics.
Do we send something by rail orby road?

(16:06):
We have a huge emphasis andeffort on actually converting
more to rail, because it's justenvironmentally friendly and
better overall.
But there are obviously, asmany of you will know, cons with
sending things by rail as well.
But that's just one elementfrom a supply chain perspective.
Overall, as a company, we thinkabout it from a water

(16:28):
stewardship perspective, how wethink about cleansing of water,
because we use a lot of water,obviously in our production
processes.
There's a lot of the water wetake out of the ground or out of
rivers, we put back throughbio-lagoons and clean it and it
actually goes back cleaner thanwhen it came out, which is a
great thing to talk about.
Likewise, we're looking atinitiatives around power supply

(16:53):
how do we have the most optimalboilers, heating, how do we cut
down on losses so you get thatbest answer but also things like
VPPAs, virtual purchase, poweragreements through solar and
wind.
So it really is justfundamentally core to everything
we do these days in ourorganization, and everybody from

(17:15):
a site manager right the waythrough to a salesperson making
that pitch to the customer, hasa pitch around sustainability
and how we add and make itbetter as we go through this.
That, for me, is a big changeover the last 10 years.
10 years ago we had a choice.
Today we don't.
It has to be done.

Jeff DiLullo (17:37):
Yeah, peter, I think we talk about this having
a choice.
So my constituency is hospitals, generally speaking, hospitals
in North America.
There is more of a choice hereto not than to do it.
So let me give you a little bitof the opportunity in hospitals
in the US.
So, first of all, health careis the most carbon inefficient
segment in the US economy.

(17:57):
Most people don't know that.
It's even more than oil and gas.
Seven percent of carbonemissions come from health care.
Now, if you think about it justfor a minute, that makes a lot
of sense.
I've got 7,000 hospitals inNorth America running 7x24x365.
A lot of lights, a lot ofmonitors, a lot of power draw.
I do these MRI images, I dox-rays.
They draw incredible amounts ofpower and you have to keep

(18:19):
those things on 24-7 and coolthem.
An MRI is a big magnet thatspins around, makes a lot of
noise, but it also creates a lotof heat, and so you have to
cool that magnet around makes alot of noise, but it also
creates a lot of heat, and soyou have to cool that magnet
with.
Helium has been the trick ofthe day for since the inception
of radiology to cool it.
It's very environmentallyinefficient and it costs a lot

(18:40):
of money.
If anybody checked the spotprice on helium today, if you'd
invested 10 years ago, youwouldn't be in this room.
So it's just that sort ofnatural reality.
Now the other piece of this isthat hospitals, unlike many
industries, most people don'tknow about 90% of hospitals in
the US are not-for-profit ornonprofit community hospitals,
smaller regional hospitals thatdon't make a lot of money.

(19:01):
They rely a lot on donationsand government funding and
reimbursement.
So during the pandemic theylost a ton of money.
Most of them have just gottenback to break-even or possibly
positive.
But when you ask me aboutcapital spending, hospitals are
not spending money onimprovements yet and they're
certainly not spending money onsustainability initiatives if

(19:21):
they don't see the economicvalue in it.
So with lower staffing that weall know is a real thing, higher
cost of staffing it justdoesn't hit the radar, but the
problem is sizable in NorthAmerica.
I say that I'll go back toPeter's comment on the ecosystem
On behalf of the whole system.
If we look at it, a hospitalmay not be able to start, but I
can help them.

(19:41):
My supply chain can be moreefficient and more sustainable
and I actually provide thatscope three capability to them.
I'll use a couple examples here.
But where I'll say in thissegment is if I don't work with
the federal government, if Idon't work with the FDA to
educate and help regulatecorrectly new capabilities
around digital technologies tobe able to get things out into
the market that actually do workfaster over remote distances,
it's very hard for hospitals toreally drive a sustainability

(20:03):
agenda.
The second area is withreimbursement.
I mentioned that If we don'twork with CMS or Health and
Human Services to make sure thathospitals can get paid back for
the things that they deploy tocreate that resiliency digitally
and sustainability, it's veryhard to get them to adopt.
So we take the ownership to doa lot of those things to make
that three legs of the stoolwork, not just the OEM in my
universe, but also how I deliverbetter capability and actually

(20:25):
help them fund those investmentsin a very cost-constrained,
capital-constrained world andactually help them fund those
investments in a very costconstrained, capital constrained
world.
I'll go here on this one becauseI wanna talk about Philips for
a second, because we're we justlike Peter, we sort of divided
into a couple different areas.
Our first area is we'veactually trademarked eco design,
so we get some royalty from it.
But what we do everything fromthat MR to that toothbrush

(20:45):
there's an eco designrequirement for us, from the
very point of innovation all theway through the market that
says I've got somesustainability feature.
Two quick examples thattoothbrush, you get the easy one
.
Every piece of packaging from aSonicare toothbrush is
completely recycled material.
Much of the product itself isfrom regenerated or recycled
material.
And then every piece ofpackaging you can completely

(21:05):
recycle and goes right back intothat circular system.
Peter's team is one of thepioneers in that world and they
are a great example of whatdoing that at scale looks like
across the globe.
The other one is that, mr, we'vespent 10 years taking the
helium out of a magnet.
So we actually have anindustry-leading first one in
the industry a helium-freemagnet.

(21:25):
Why is that a big deal?
Well, for me it's excitingbecause it's totally
revolutionary technology that inmy mind I think.
Well, it avoids the carbonfootprint.
Helium leaks.
You have to refill it.
It's very costly, but when Ican put that into a hospital and
say, yeah, it's going to cost alittle bit more, I got to pay
for a better product.
I might charge you 10% more fora helium free magnet.
But you're going to save 25 to30% on your operating costs

(21:49):
because you'll never have to buyhelium, you'll never have to
quench it, you'll never have torun it 24-7 like you do today.
If it's not in use, I canactually put dollars to it and
I'll talk about that later, howwe actually can do that economic
valuation.
That's a big deal to a hospital.
That's an immediate no-brainerto a CFO.

Tom Goldsby (22:05):
That's such a great example because, by virtue of
reframing the problem, you'vesuggested that there's not
necessarily a sacrifice to bemade.
Right and the performance ofthe product, the economics.
It does require a differentbusiness model, different
approach and certainly differentsupply chains to get there, but
to that point it takessomething of a leap of faith.
You know there was the mentionof the science around it and

(22:27):
certainly the science has madehuge strides over the last
couple of years to kind ofmeasure this project forward.
But let's get to that businessimpact a little bit.
Jeff, you kind of teed it upthere so we'll come back to you.
You mentioned the finances.
How do you get to some sense ofan ROI calculation?

Jeff DiLullo (22:42):
It's interesting Right up the street.
I'm going to give two examplesof this.
These are really important, butright up the street, in
Vanderbilt University, they aremaniacal.
They're one of the bestsustainability hospitals, the
research center.
They really are trying to findways to decarbonize radiology.
They are great partners with usand so we signed up to do a
study.
They wanted to look at thedecarbonization effect of more
efficient radiology or moreefficient imaging.
We wanted to look at theeconomic value to a hospital.

(23:05):
So we did a joint study andpublished it at the Radiology
Society of North America thislast year.
But basically what we could showis that I can get higher
throughput, in other words, morepatients seen in a diagnostic
imaging scenario, significantlymore at a lower total carbon
footprint and a lower energydraw, like 17% lower carbon
footprint for 25% more peoplethrough the process at a lower

(23:27):
total operating cost.
We measured the power draw on amore efficient MR.
We measured the cooling impactthat we had to have, so
periodically you have to cool it.
You don't have to do that.
We actually put it on a trailerand moved it, so we actually
have an MR that you can drivearound, which is incredible to
think that you could just move adiagnostic imaging into a
community that would never seeit and start to get access to

(23:48):
better diagnostics everywhere.
So we do the economic value andthey endorse it.
Now I have something to go talkto CFOs around all hospitals to
say I understand the capitalimpact here.
The second aspect is we'redoing more with business models
to make it more of anoperational type of model.
It seems pretty simple, but toget people over the hump of what
they have to commit on acapital, but if I can stream
that out over a long period oftime, I actually am able to

(24:11):
start bringing technologyrefreshes that significantly
reduce their scope.
Three, because I'm giving them.
I'm giving them visibility toit, but I'm also reducing their
scope too because they'redrawing less power to operate
their facility in tangible wayswhen they really need the money.

Ted Stank (24:29):
You know what I love about these stories and, peter,
I want to, I want to get yourtake on this in a second but
let's say 25 years ago, not 10years ago, but 25 years ago,
when that respondent to Tom andmy survey reacted so viscerally
and negatively about what wewere talking about.
What I love about our storiestoday is that sustainability
initiatives are good business.
You know they're not like let'sdo something because it's the
right thing to do, which whichit is, but it's also good

(24:51):
business.
I mean it's good business sense.
I mean if we could fill a truckup from 64% loaded to 75%
loaded, that saves us money intransportation, but think of all
the other implications it hasfrom a-.

Tom Goldsby (25:03):
And I just want to add just a little more
commentary for our studentsbenefit.
It sounds like what you'resaying is you're going beyond
the purchase price right, makingthat decision, even going
beyond landed cost, and it'ssomething we teach total cost of
ownership.
Where's Wendy Tate?
See, we do there you are, wendySee, we listen, we listen and
it is looking at the full lifecycle of that product and I

(25:26):
think later you're going to betalking about not just a single
life cycle with your products,but multiple life cycles.
So we'll save that for Peter.

Peter Anderson (25:31):
I mean, we were actually talking about it just
before breakfast today, wherethere's actually an argument now
and, wendy, if you have it in,I apologize, but actually
putting in some sort of ESGcalculation into the TCO, which
there's nobody I know of from myconsulting days that actually
calculate things that way.
You do it because it's theright thing to do and because I

(25:52):
mean to your point, ed,eliminate waste.
If we can move from 80 tonsloading in a rail car and put 83
tons in instead, actuallythere's a sustainability impact
to it.
So, no, the initiatives arereally interesting because for
us it's not just about making abetter product for all of you,
it's about making somethingthat's recyclable.
It's also I mean, jeff, againwe were talking about clinical

(26:16):
trials how could a paper andpackaging company get involved
in clinical trials?
Well, through digitization andcreation of boxes, no longer the
pullback with the pieces ofplastic and foil to get to the
tablets, a tamper-proof, slidingcardboard top that actually
registers when you take a tabletout of the packaging.

(26:38):
Now, again, it's sustainablebecause it can be recycled.
I mean, there's a whole host ofthings that go with that, but
the bit I wanted to focus on andthe bit that really gets me
excited is many of ourbusinesses haven't thought about
some of the opportunities thatwe have for byproducts, the
selling things back into thesustainability circle.

(27:01):
I mean, one of the things thatwe have is this thing called CTO
crude tall oil.
I won't try and explain what itis, but it's a byproduct of
what comes out and guess what?
It's a key constituent, keycomponent of making sustainable
aviation fuel, with the Europeanregulations just saying that we
need to have sustainableaviation fuel to fly into Europe

(27:23):
.
Now it's a byproduct that'sactually worth probably 10 or 20
times what it was to mepreviously.
And so if we just challengeourselves and look at actually
our own businesses and whatwe're doing carbon capture, all
of those sorts of things we'relooking at most of our sites
today in terms of being able todeliver something over and above

(27:45):
the finished product, and Ithink that's a challenge for all
of us Can.

Jeff DiLullo (27:48):
I pee off something, peter said Please,
please, like.
This excites me.
How many of you have been in ahospital where you've had a
nurse come in and administersomething a blood sample or
medication?
They've scanned something ordone biometric.
Raise your hand if you hadanybody.
Okay.
So a lot of you see thistechnology deploying in
hospitals.
Hospitals are great places toget attention.
The problem is it's veryexpensive and it consumes staff

(28:09):
that isn't really in the ranksanymore.
So to get people back to homewould be a great opportunity.
Digital capability, what Peterjust talked about.
You can measure somebody openinga package, but you don't
actually know if they took it.
So today, if I can sendsomebody home and I can measure,
at least I know they opened it,whether they gave it to their

(28:30):
cat or they flushed it on thetoilet, who knows?
But the number one problem withreadmissions in North America,
which is a very expensive thing,is that people don't take the
medication they go home with.
They have a recurrence,particularly with heart or
stroke related victims.
They have a recurrence and theyhave to get readmitted, so the
cost goes up tenfold.
So we're actually experimentingwith capability to take that
scanning capability.
Anybody have an aura ring or awatch.
We're doing pilots with the DODand the VA on forced

(28:50):
degradation based on biometricsignals, so we're now parlaying
that into home medication.
So if your medication gives youan uplift of some kind of
biometric signal ordecomposition, if you don't take
it, we can alert somebody at anurse's desk that can call your
house and say hey, I see youhaven't taken your medication
yet.
Can you tell me what's up?
Do you need help?
That's powerful and it putspeople back in their homes, it

(29:13):
reduces the total cost andimproves the efficiency of
health care workers all becauseof stuff that Peter's putting
into the market and that we cancapitalize on with this kind of
digital tracking layer that nowexists with an IoT-enabled
health care system.

Ted Stank (29:25):
So to underscore this theme that we were talking
about in terms of can youimagine 20 years ago at this
forum, the topics we'd betalking about?
It wouldn't be how do you getpatients to take the meds so
that they don't get readmittedto the hospital?
And that's a core supply chainconcern, right?
That's pretty fascinating.

Tom Goldsby (29:43):
So I think it was maybe Peter that might have
introduced the notion of scopes,and certainly regulation was
something very much talked about, going beyond compliance
perhaps, but meanwhile a lot ofrules and regulations coming
about.
We were very closely watchingwhat the SEC was going to do
around scope 1, 2, 3 emissionsand they announced a few weeks

(30:04):
ago scope 3 is off the table,Scope 1, 2 seem to be on the
table.

Ted Stank (30:09):
Except in California and Europe.

Tom Goldsby (30:13):
How about a little bit of explanation, maybe about
what those Scope 1-2-3 emissionsare and kind of you know maybe
what you're doing presently andwhat you expect to do into the
future.

Peter Anderson (30:20):
Well, let me start with Scope 3, because I
was watching it very closely, asyou can imagine, tom, and it's
a real challenge for us at themoment because every one of my
customers still wants me toreport scope three to them.
By the way, every one of mycustomers says here's my format,
can you actually submit it tome?

(30:42):
So I get hundreds of requestsin different formats asking for
slightly different information,and so I was hoping maybe
praying is too hard a word butthat we were actually going to
have some standardization andthe ability to start reporting
on scope three in a common way,just because the SEC decided not
to do it.
Many companies still have to doit because they have a European

(31:06):
influence, or they sellproducts in Europe or they are
European.
So it's really interesting.
I'll tell you a really funnyone.
I had five strategic initiativesin my supply chain this year.
One of them was wasteelimination, which was to get at
all of the things to do withsustainability.
The second one was scope three,and so our team set about

(31:27):
looking at the differentelements of scope three and
saying how do we do thingsdifferently?
And we presented it to thebroader leadership team and they
looked at it and said, okay,and then I had one of our
smarter young individuals comethrough and say well, peter,
does that mean I can work fromhome now, because part of Scope

(31:47):
3 reporting is your home commuteto work and so they felt that
they could be more sustainableand that means that I can do
home working for much longer andI don't need to come into the
office.
I don't know whether anybodyelse has actually had that
challenge yet, but it made mesmile about where scope three is
taking things to.
But scope three is, I mean,it's super broad, and the sooner

(32:10):
we can get some clearregulation around reporting and
standards and everything elsethat's consistent across all
industries, the easier it willbe for all of us, because I'm
sure all of you are having thesame challenges that I have with
customers in terms of having toreport it in different ways.
Did they provide?

Ted Stank (32:27):
any indication that they would be coming in the
future with some kind ofstandardization, or did they
just say?

Peter Anderson (32:32):
I think they left it hanging out there at the
moment, unfortunately.

Ted Stank (32:36):
We're the government.
We're here to help Mr Reagan.

Tom Goldsby (32:41):
Now meanwhile, jeff , you come from a highly
regulated industry anyway, right, and then we have these
environmental expectations kindof layered in there as well,
kind of what's Philip's position.

Jeff DiLullo (32:51):
All right, I'm going to riff on what Peter said
, because my universe isdifferent.
I have hospitals that arestruggling to understand and
digest even the basics ofsustainability.
I talked about it because ofconsumption but for everyone
everyone probably knows in thisroom scope one is your stuff.
Scope two is the stuff you usethat other people provide you.
Scope three is your upstream,super high level.
Scope three and health care is73 percent of emissions.

(33:14):
So scope three is a bigfreaking deal now.
So I work up my scope threeright.
So I'm working.
I told you 50 of our suppliers,by volume, have science-based
targets that we require Iactually think that's
differentiation for thesuppliers to be able to comply
with that.
I'm going to report that, whichmeans my 37-page annual report
section on sustainability.
I can provide to my customersand say this is what I'm doing

(33:36):
to help you.
If there's an appetite todigest, that they will.
But most of them have a hardtime, so I'm helping them on
scope too, just to refresh.
That's the economic value thatI can provide them in terms of
their total cost.
So we are trying to work verycleverly with hospitals to help
them do that.
But the regulation's a big deal.
I talked about this eco-design,which is embedded in our design
philosophy, but there's alsothe realization of new

(33:58):
technologies.
Ai, broadly speaking, andIoT-enabled capability allow us
to do things digitally that youcould never do.
The problem is the governmentdoesn't catch up with the
reimbursement and the regulatoryaspects of those things.
So we have technology todaythat can go into people's homes
and track their biometrics, andyou can't reimburse hospitals

(34:19):
for it.
So we spend a lot of time doingthat because we think it has to
be a carrot and a stick.
You can't just beat people intocompliance.
You have to show a path, andusually incentives for hospitals
mean government increases inMedicare and Medicaid
capabilities and commercialpayers may follow, but really
getting the impetus to havesupport behind it.
I'm going to give you oneexample of where digital matters

(34:40):
and it aligns to our mission.
I have an ultrasound on an iPad.
Not this iPad, sorry, but Ihave an ultrasound on an iPad.
It's a product we sell.
We send it to battlefields inthe Middle East and we send it
to rural communities for OBGYNcare in central Tennessee.
If you are west of Jackson, youprobably have to drive an hour
to get to an OBGYN.
There are 55 counties in thestate of Tennessee that have no

(35:03):
OBGYN birthing center or directcare.
So what do you have to do?
You either take off workmultiple times during your
pregnancy to drive someplace youhave to do.
You either take off workmultiple times during your
pregnancy to drive someplace.
If you're a single mother,that's worse or you can have a
PCP or a doula come to you.
So the hospital provides you adoula.
We arm them with a remoteultrasound capability, with an
OBGYN expert stenographer atVanderbilt that can literally

(35:26):
over the shoulder and interpretin real time why you're getting
your ultrasound.
We dramatically reduce the costof access to care and you bring
people closer to their home.
There's no driving.
There's a lot of sustainabilityimplications there as well from
a carbon footprint, but reallyyou're increasing care.
Now the one thing I want to sayhere it's slow to come and
that's where we have to spend alot of energy.
Virginia yesterday approved thelaw that funded this into the

(35:47):
state of Virginia.
Tennessee is next, but we'regoing to multiple states to do
this, because if you get theregulatory side, the incentive
or the carrot, it goes muchfaster.
And then you're getting thedecarbonization effort and
you're increasing care along theway.
Better care, more people.
It's amazing what we can dowith technology today.

Peter Anderson (36:07):
For me, tom, the regulatory piece pays a huge
leg in what we do from arecycling perspective.
One of my biggest challenges isactually getting recycled
material into my recycle plants.
And, by the way, I take mixedwaste.
I mean I'll quite happily takecardboard, plastic, aluminum,
steel, concrete blocks.

(36:28):
Sometimes Yep people put thoseinto waste, say in concrete
blocks.
Sometimes Yep people put thoseinto waste, say in the
recyclable, which is alwaysinteresting, but we just can't
get enough of it, and it'sbecause we don't have a culture
of recycling in the US.
So do we actually have to startthinking differently to get
people to recycle more?

(36:49):
Goodfield tells me we're notgoing to enforce it too well in
the US.
So how do we create somethingthat's more?
It goes back to the very startof this conversation.
Do you actually createsomething where there's an
incentive you get your 10 centswhen your pizza box goes through
the waste recycling center?
Is there a way of actuallydigitizing that to be able to
track it back and say, oh,that's Tom's box, let's put it

(37:13):
back onto Tom's credit cardbecause he deserves it, because
he recycled it.

Ted Stank (37:17):
I think there's a lot of misinformation too about
recycling.
I think I'm just going to usemy own example.
When we first started recycling, I was very excited about it.
Put everything in the recycling.
Then you start hearing well,there's a lot of scams in
recycling and the plastics thathave the different recycling
numbers.
We think that they're gettingrecycled, but they're not really
getting recycled.

(37:37):
And so I think from a consumerstandpoint, I think a lot of
people are a little bit leeryabout what they really can put
in and what they can't put in.

Tom Goldsby (37:43):
Yeah, we've really been focusing on transparency.
We even talked about thatearlier in the forum, you know,
and it's really kind of focusedon that inbound side of the
business.
But to your point, having thattransparency of the closed loop
and it's like where's this stuffgo?
Is it really being put to someproductive use on the far side
of my consumption?

Ted Stank (37:59):
Yeah, I mean to Peter's point.
That's a big aha.
I think for all of us that hecan't get enough recycled,
recyclable material.

Introduction (38:10):
And you know, COVID was a nightmare.

Peter Anderson (38:11):
We didn't have drivers to pick up with garbage
trucks.
So guess what, instead of therecycling truck coming around
and then, just maybe 10 minuteslater, a separate truck coming
around and collecting the normalgarbage, we'd have the
recycling truck drive up theroad.
So people still think they'regetting things recycled and
they're paying a little bit of apremium for it.
And guess what?
You do a U-turn at the top ofthe road and come down and put
the garbage into the same truck.
So something as simple asgetting enough drivers to

(38:35):
actually be able to do thecollections is a challenge.

Tom Goldsby (38:38):
So I think we've done a great job of kind of
capturing where we are and howwe've gotten here.
But what about into the future?
What are the two of you seeing?
There's been a little bit ofreference to maybe how
digitalization tools, logic,business models need to adapt.
Even you know, again, how theregulatory statutes need to

(39:02):
adapt as well.
But what are you seeing withinyour businesses in terms of you
know, Peter, you mentioned theinitiatives and amazing to hear
that going to focus on therecyclability of product,
closing that loop, and, Jeff,you've spoken of net zero four
years ago.
All right, so what's kind ofthe future?
What are the goals andorganizations and how do you
expect to get there?

Peter Anderson (39:20):
I mean we have a science-based target of a
reduction of 27.5% SBTI, and sowe are absolutely working
towards doing that, and a lot ofthat is through upgrading our
assets.
I mean, my average mill age is57 years old.
So there's a lot of opportunityfor us to keep actually

(39:41):
investing in terms of developingnew technologies, new chemicals
, new materials.
I mean for those of you thatdrink your coffee every morning,
I mean that chemistry on theinside of the cup in many
instances is actually a polylayer.
So inventing cups with adifferent type of chemistry that
is absolutely recyclable, Imean those different types of

(40:03):
things.
Grease-proof cardboard, I meanfour years ago, did you ever see
meat products actually in acardboard container?
And the answer was no, becauseblood bled.
Meat products actually in acardboard container?
And the answer was no, becauseblood bled through and there was
a problem.
Well, today the chemistriesallow us to actually have it
fully recyclable but also toincrease that barrier.
So we're using cardboardproducts for much greater use

(40:24):
than we ever did in the past.
So that's the big initiativeFor us, big push, and if you
listen to our investor callsplastics replacement is the way
forward.
We can recycle our own materials.
We can create that circulareconomy much, much harder.
There was a great comment madeby one of the big drinks
companies that I was talking to.
It was about 12 months ago andthis particular individual said

(40:48):
you know, if I took all of therecycled plastic that I need to
make the bottles for my drinks,nobody else in the world would
have any.
Is that right?
So there's an even biggerproblem from a recycling
perspective for plastic thanthere actually is with cardboard
and paper and corrugate.
So us being able to get thatmore back into the network,

(41:09):
build out recycling facilities,to be able to do more, it really
comes down to education.
For me, the education is thebit that the more we can do and
get it out to people indifferent parts of the country I
mean we have good programs onthe East Coast and California
and then odd spots in othermajor conurbations, but nobody
recycles anywhere else.

(41:29):
For me that's one of the biginitiatives that we're working
on?

Jeff DiLullo (41:34):
Yeah, I think working.
I'll break it in a couple areasbecause our product lines are
so different.
In some of the smaller packagedgoods, working with companies
like Peter's to make sure thatour packaging is really, you
know, leveraging as muchsustainable material as you can.
And recycling network.
That's actually the easiest.
What people do with that,whether they put it in their
blue bin or their green bin, isdifferent.
But making sure that I'mproviding a really sustainable

(41:57):
product to them, even into theproduct components I talked
about with the eco design.
The second area, that is, if Ioutfit, let's say, a hospital,
if I go to a Tennessee hospitalover here and we outfit all 300
rooms with new monitors, thereare boxes like this.
Every, every bed has a monitor.
I can do that today in a waythat instead of doing a monitor
replacement every four or fiveyears when the life cycle of the

(42:19):
box, I can now put it in thereand run it as a software upgrade
where I'm just upgrading thesoftware.
That's tremendous amount ofmaterial that's not coming out
of a hospital.
It's better future-proofing andeconomics for the hospital and
I can actually do more at thesoftware layer.
So technology is enabling me tointeract with devices with less
boxing, less in and out.
And then the big ones.
Here I always go back to the MR, because if you can solve that

(42:41):
problem a 10,000-pound magnetwhat do you do with that?
So keeping those systems in uselonger.
So if an active life cycle is10, how do I stretch two more
years with upgrades and thingsthat I can do in place?
And then one thing we've beengetting very good at in the last
few years is how do Iresponsibly recycle that product
?
So if I take it out, it doesn'tthe hospital's not taking it

(43:02):
out, I actually offer theservice.
I'll take it out, I'll take itback, thank you.
And then I'll either break itdown to the lowest possible
parts, use everything I can foraftermarket support, or I grind
it up and make sure everything'sdone in a recyclable way.
Or one thing we love to dobecause it actually helps.
Our mission is refurbish andreset to a secondary market or
access to care for people thatwould never have access to care.

(43:23):
I go to this maternal mortalitything.
So we have a partnership withthe Phillips Foundation, but
also with another company calledMedShare.
It doesn't matter, we've gotmany of them, but we'll take it
and then offer it to them.
They go into the South Bay areain Oakland where black mothers
and babies have a three timeshigher likely death rate, and we
have them partner with clinicsto deploy and train these assets
.
So we bring access to care notjust in the US but also around

(43:46):
the world.
But these are ways if you canextend the life of a product
that has a life, and then I canstill bring it back through our
circularity program.
By the way interesting fact weeven take the cellophane
wrapping of the pallets thatcome into our North American
recycling branches in Nashville.
We even turn that over toTendot and they grind that into
the asphalt that Nashville roadsso desperately need.

Tom Goldsby (44:06):
Amen.
And, by the way, that's such acompelling example of your
closed loop circular example,and you featured it when you
were last with us in the podcastI think it was fall 22.
And so I encourage people ifyou want to learn more about
that example, you can go backand find it in the library.
Also, I included that in oursupply chain textbook and also
my sustainability book.
Do I get a royalty?

(44:26):
You'll get a share, I'll getsomething.
Yeah, it's not exactly aget-rich-quick scheme, so stay
with it.

Ted Stank (44:32):
Tom, you want to go to the screen and see if we do
some Q&A.
I mean, I think you guys haveprovided some amazing examples
of true innovation, but do youfeel that greenwashing is
prevalent across industry?

Jeff DiLullo (44:43):
I think there's a desire to want to go here.
I think people lack the skillsand the impetus to want to go
here.
I think people lack the skillsand the impetus.
Unless people can understandthe total value chain creation
in sustainable innovation andyou really work as partnerships,
it's very hard to get started.
So I wouldn't call itgreenwashing.
There's plenty of that, but Ithink people that are actually
deeply committed to it it'sprobably much fewer than those

(45:05):
that talk about it.
The other thing I just want toadd on this and Peter your
thoughts ESG is like a dirtyword in some parts of the
country, sorry.
There are really good thingsthat people should be doing.
Do not believe we should not becontaminating our earth, right
Like, it's just common sense.
So don't throw everything awaywith your ideology, because
there's a lot of good thingsthat happen for our kids and

(45:25):
their kids when we do thingsresponsibly, and that's part of
our commitment to our own planetthat we should just practice.

Ted Stank (45:32):
And I would go back again to the notion that, even
if you are like totally opposedto that, you think all this
science is BS.
There are really good businesscase reasons for doing this
right.

Tom Goldsby (45:43):
You know just as I used to spend a lot of my time,
you know, teaching, preachingoperational excellence, and I'd
speak of those beautiful dayswhen you could serve a customer
better at a lower cost.
Right, those are the great ahas.
That's the true innovation.
I think we have thatopportunity here to bring
forward better solutions,perhaps at a lower cost, perhaps
at healthier margins, and havethat positive impact on the

(46:05):
society, environment.

Peter Anderson (46:06):
It goes back to the TCO piece.
Tom, If you really look at thetrue cost of something and you
measure it from ground back tothe earth again and all of the
steps in between, if we actuallylook and calculate it that way,
I think you do get to thelowest total cost of ownership.
If you only look at segments ofit, then you can optimize your

(46:26):
own and actually make somethingthat's much worse for the whole.

Tom Goldsby (46:31):
It does mean we've got to reframe that problem
right.
We've got to get beyond themonth or the quarter.
These are long-term solutions.

Ted Stank (46:35):
I sat on a panel yesterday for our MS and supply
chain students who are here inan immersion for a few days.
They're in an online programbut they have to come to campus
and several of them are heretoday as well.
And there was a question about,over the years that we've been
doing research, what are kind ofthe major themes that have
emerged?
And my two were, first of all,speed kills we need to speed
processes.

(46:56):
And second of all, and probablythe most important, is we need
to start talking in terms of TCOthat if we can couch almost all
of our initiatives in TCO, wehave so many wins out there.
But again, it's an educationprocess, right?

Tom Goldsby (47:11):
I think to that point.
There's a question from theaudience that is directed to
Peter.
But, jeff, you can take this aswell how are companies like
Westrock supporting nonprofits,government agencies, to help
educate public and promoteincreased recycling, that
education piece?
So how are you getting thatmessage out?

Peter Anderson (47:28):
Every damn way possible.
Like can I put my dirty pizzabox?

Ted Stank (47:32):
in the recycling bin.

Peter Anderson (47:34):
Absolutely.

Ted Stank (47:34):
Because I have been told that if you have any kind
of food product in there, youcan't.
Education starts right here.

Peter Anderson (47:40):
I don't have some, but I mean the new
coatings that are inside ofpizza boxes are grease-proof.

Ted Stank (47:46):
Okay, you heard it here.
First Recycle your pizza boxes.

Peter Anderson (47:50):
I'll take all your pizza boxes back.
There's certain things thatobviously the cardboard that we
put in comes from Virgin,because there's a requirement
for that from fibers, from trees.
But there are certain things werecycle, so not primaries, like
sort of secondary and tertiarypackaging products.
So for us, the way we'relooking at it is we're taking it

(48:12):
one right the way down to theschools level.
I mean we're actually workingwith a number of schools in
different places to actually tryand get the kids of today to
understand the benefits ofrecycling, because we've
probably lost the cause for someof the older people in the
world.
So how do we get the kids toactually adopt it?
How do we get them to thinkabout recycling as the right

(48:33):
thing to do?
We're also working with a numberof non-for-profits in terms of
promoting what we do aroundrecycling.
I mean people think ofrecycling facilities as really
horrible, dirty places they canbe.
But I also have some of thehighest technology that we have

(48:57):
in the whole of our company,with high-speed automated
picking robots that actuallypick high speed off conveyors
and actually can determinewhether that's a piece of brown
paper or white paper and pick itoff and put it into the right
bin.
No longer is it a case ofhaving people standing there and
doing this.
So the technology exists toactually do a lot of this, but
the next big piece around it iswe're working with all of the

(49:18):
forestry agencies around thedifferent groups to promote
recycling as well, and obviouslythat's our link into DC and all
the things that we're trying todo from a recycling perspective
.
There Europe is taking it to adifferent level.
I'm not sure that we'll everget to that sort of level, but
it is going to have a cost on usif we don't, because it may

(49:38):
force us to actually think ofthings very differently, about
how we manufacture them in theUS for use in Europe.
Those regulations are coming,jeff, kind of how are you
working?

Tom Goldsby (49:49):
You know it's incredible to hear what you're
doing kind of within the fourwalls of Philips.
But what are you doing upstream, downstream and also with the
larger stakeholder environment?

Jeff DiLullo (49:57):
Upstream, I mentioned, I think we're pretty
transparent.
We actually favor supply base,that is, practicing
science-based target activitiesand we validate those.
We have a team that goes andvalidates our supply base and I
think that to me, that incentiveto get more business for doing
that is a big one to shape us.
There's a 7x increase if I canimprove my scope three to the

(50:18):
effectiveness of what I deliverback to hospitals.
I mean the value is huge.
So we're pretty committedupstream.
Downstream, I think thecircularity aspect of that we
continue to push away at thecircularity, or keeping things
in use longer or repurposingthem.
There's a question I thinkabout how do you work with
nonprofit and government?
I mentioned that we havemultiple nonprofits that we

(50:38):
actually partner with as part ofthat circularity journey.
So instead of us owning theasset when it comes back from a
hospital, we repurpose it tothem.
They take ownership, bring itback to us when it's done in its
secondary life.
That's just a network.
It's sort of like a partnerecosystem.
It's not overly complex tothink through.
You just have to dedicateresource to doing it.
The last thing I'd say and thisis a big one most of the things

(51:00):
that we're delivering today havea digital or software-enabled
component to it.
That, candidly, the FDA.
They're amazing people but thetechnology is moving so fast If
you think about the potentialnegative implication of moving
predictive analytics forlife-saving diagnosis that you
could get wrong you have to bevery careful how you're doing it
.
So we spend a lot of energywith partners at the FDA,

(51:23):
helping them explain andunderstand and demystify what
the capability is.
They inform us of what we needto do to raise the bar.
That's an industry-level thingand that's also a Phillips level
thing.
And then I think that the magicfor us is, you know, public
service announcements, thethings we do partner with
hospitals locally for publicservice announcements.
There's, there are fundedresources that we can partner
with.
But but really helping thisreimbursement chain?
I know it's unique to hospitals, but it's not unique to how you

(51:46):
proliferate capability, becauseyou always have to have a path
to money.
So if you look at it only fromus to hospitals, it doesn't work
effectively.
If you look at it across thewhole ecosystem of how health
care gets funded, technologydeveloped, delivered and then
circularly back into newenvironments, you have to kind
of take that.
So our team has to look thatend to end, even though we're

(52:07):
only really delivering productsto customers.
We're trying to influence thewhole chain.

Tom Goldsby (52:11):
It's kind of an interesting question that came
from the audience, the notion ofhorizontal collaboration.
So are you working with anynon-traditional stakeholders, ie
perhaps competitors?
Are you all kind of aligned insome way, absolutely?

Jeff DiLullo (52:24):
I'll just say briefly because one of the
largest med tech advocacy groupin the world.
I work with GE and Siemens andHolosite and so many others that
are really we're all partneringin a lot of these initiatives
that are really importantbecause our altruistic nature is
to improve access to care.
We think we can do that in avery sustainable way, but it
takes the whole economy, itcan't just be one or two

(52:46):
partners.
So we're pretty active in a lotof those forums that allow us
to express our voicecollectively to the decision
makers.

Peter Anderson (52:53):
No, it's a great question and I mean part of my
team does it every single day.
So paper industry in the US.
We have paper mills in lots ofdifferent places, lots of
different geographies.
Maybe I get a contract withWalmart where I'm collecting all
of their cardboard waste out ofa site in a particular locality

(53:13):
.
Maybe it doesn't actually fitwith me to move that cardboard
waste 400 miles across thecountry to actually one of my
mills.
We'll actually do a trade withour competitors and say how
about you give me some of yoursin this area and I'll give you
yours?
And we both win and theenvironment wins because we
don't have the logistics costsassociated with it.

(53:34):
So we do have a very activetrading network around that as
well.
It's not just about getting thebest price for us, it's also
looking about how we can worktogether to actually get to the
overall best result.
Fascinating.

Ted Stank (53:47):
Well, we're reaching our end of this session.
How about a big round ofapplause, since we are in front
of a live television for ourguests?
Guys, I could talk to you allall day long.
What are you all doing?
April 9th 2025?
Should we book it or what?

Tom Goldsby (54:04):
All right, we'll put a wrap on it there.
And again, just remind ourfriends out there, you can find
us at gsci at utkedu.
And put a wrap on it Until nexttime.
Thanks so much.

Introduction (54:13):
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(54:36):
curtain on the world of supplychain, educating and
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