ProcureTechSTARS with Martin Chilcott, CEO and Chairman of Manufacture 2030
- Lizzie Black
- April 8, 2022
ProcureTechSTARS with Martin Chilcott, Chairman and CEO of Manufacture2030, a unique platform helping to measure, manage and improve the performance of each individual site in customers manufacturing supply chain.
During the conversation, Martin shared his thoughts on glide paths, partnerships, the Greiner curve culture, creative destruction labs, market acceleration and the Mediterranean.
1. What’s Manufacture2030’s mission?
Manufacture 2030’s mission is to help global corporations accelerate carbon reduction significantly in supply chains, particularly in manufacturing, but not just their manufacturing supply chains.
We’re looking to see if we can get the manufacturing supply chains that we’re working with to halve their emissions by 2030 which is a really big, hairy, audacious goal, but is something that we have to do as an economy, society and with all businesses in order to maintain the civilization that we have developed into the future for our children and everyone. It’s a mission that’s at the heart of the business and everybody who works with our clients. Our clients are extraordinary people that are absolutely committed to this so it really gets you up in the morning.
“The thing that makes us different from others, is the vast majority of software platforms out there that focus on ESG, carbon or sustainability around supply chains, are essentially data collection platforms.”
They focus on creating visibility into the supply chain, which is largely historical, and we do that too. On top of that, we get the participating suppliers on our platform to build an action plan and we help them. We give them over 500 best practices they can choose from which then predicts the likely rate of reduction over time towards their customers’ target. The large corporations we work with tend to have signed up to net zero or science based targets, so they’ve got a point in time which they are going to be held accountable. They need to know whether their supply chain is likely to help them achieve their target or not and see if they’re on the right path.
We help identify gaps and see if you’re missing your target by 2030 by 10% to 30%, where we then work with the customer, supply chain owner or third party to identify and close the gap from testing.
2. What have been the most significant decisions and milestones in the Manufacture 2030 journey so far?
The original legal operating entity of the company is 2degrees. We did a pivot about 4 years ago where we relaunched the platform and technology entirely as Manufacture 2030 which was a massive pivot point for us. That was because we had been operating with some success but limited traction in the market with a business model which wasn’t really scalable, operating a platform based on social technology (a LinkedIn for sustainable supply chains). It lacked a hard edge that would enable supply chain owners and suppliers to manage towards their targets.
We still have peer-to-peer learning components in there, but the whole platform and service has more teeth and edge.
Our next significant decision was to focus on key partnerships. Our most important partnership is with the supply chain owner, where it is a partnership between us and how we engage with their suppliers.
The number one source of data initially is from the supply chain owner. Who are your suppliers? Where are the hotspots? Where do we need to concentrate in the first year or two before we get moving into the long tail? We’ve got the data: how do we support driving improvement? Supply chain owners are absolutely the key.
We’ve also got an important partnership with Edison Energy who are part of Southern California Edison in North America and are looking at some really interesting initiatives with them about how we can aggregate up demand for renewables and create new virtual power purchase agreements that can bring capital in to build wind farms. I think there could potentially be some breakthroughs.
We also think there will be important partnerships in the future around portability of data. There’s a big initiative for instance, with the World Business Council for Sustainable Development, and a number of people who are trying to look at portability and standardisation of product footprint data. If they make progress with that I think that’s going to be very important for us to use alongside our existing approach. What we all mustn’t do, and there is a danger of this, is that we mustn’t stop trying to get actual reduction as well as actual data standards. I have a bit of a bugbear about this at the moment; we have 10 years in which to turn this oil tanker around.
“Lots of companies are still focused on trying to get data they really believe in, whereas actually what they need is sufficiently good data to start driving an improvement in the supply chain and they need to do that in parallel to getting standardised data that’s reliable.”
It’s a big concern, people think this is a linear process and it just isn’t. We need to work with what is good enough to enable us to push forward, tidy up, clean up and sort things out in the background.
3. What do you look for in the perfect customer ?
We have some fabulous clients. We see global corporations as clients and suppliers as subscribers; they’re the ones using the platform to make the reductions and meet that future target.
What makes them ‘perfect’ is that they understand the speed we have to move at. They have great ambition, are prepared to and are integrating carbon reduction into their procurement operations. For example, they are creating scorecards, building action plans and glide paths to improve their ratings which have material impact on contracting, negotiations and the company.
We’ve got clients at the beginning of their journey trying to understand things like that, and they are joining up internally, trying to get the cost of carbon to be a central part of their conversation.
We want suppliers and corporates to show how they aim to improve their glide path in time for 2030 which becomes a real lever for change.
4. What are the foundations of a great team?
We once brought in some very experienced, capable people, but they didn’t have any background or any particular passion for sustainable business and didn’t understand the culture not just in our organisation, but the culture of corporations working with us. As I said earlier, our clients are hugely committed to trying to make the difference, even if they face big challenges trying to do it, but they are so committed and want the same level of commitment on our side. We brought in some people who on paper were very experienced, particularly in software sales, but they just culturally didn’t click with us nor the clients.
“I think building a great team is about building a great culture and respecting it and recognising that you’ve got to work on it. I think that was an important lesson that we learned.”
I think also alongside that is how you set up horizontal information flows and management, in order to support your ability to scale without creating silos, which is we’re going through at the moment.
How do we grow a senior leadership team which are able to fully empower to lead the business without them all running off and doing their own siloed things? Without putting bureaucracies in the place that slow down slow down the innovation?
How do you maintain culture?
How do you maintain the agility you need in your organisation whilst you scale at the same time?
There’s a great thing called the Greiner curve, which asks these kinds of questions and maps out periods of growth and crisis. My only disagreement is that it all looks rather linear and nice but I find the reality to be a little bit more chaotic – you can’t account for war or COVID!
5. As we emerge from COVID what will you be doing differently?
COVID has been an interesting experience for us and for the whole of the sustainable business industry.
“Many of our big corporate clients froze in their decision making for about three or four months and then everybody leapt forward…the market just massively accelerated.”
I think people suddenly understood because of COVID how these off balance sheet risks could absolutely destroy corporate value in as little as a few months and that they really had to deal with this stuff properly. It also gave people an opportunity to reset and rethink, and since Manufacture2030 has been on the market, we have accelerated!
There have been other things happening at the same time that have encouraged that, but particularly how the Financial Services saw climate risk and felt its impact. Our market is exploding, driven largely by investors demanding public companies get their act together as they want to keep investing for another 10 years.
We grew new subscriptions by 153% last year, so we are growing really fast. We are going to be doing a Series A in Summer which should help us to grow in North America which is an important market for us, but also develop Customer Success capabilities in South East Asia, closer to the supply chains that were supporting.
6. What is the vision for Manufacture 2030 for the future and what will be most important to achieve it? What does great look like in five years?
We see Manufacture2030 in three stages.
Stage 1
We have to get the core engine to scale. The software as a service platform, and peripheral services or a value-added services around it. We can see that we might have 30,000 suppliers using the platform by 2030; we’re at 3,000 now and we expect to continue to grow. There is still a lot of work to do, but we are gradually managing to do this with suppliers, supply chains and across industries to understand the rate of carbon reductions taking place.
We can also see the big blockers, for example, if you’re an individual supplier in Wisconsin and you’re supplying wheel hubs to Honda, there’s a certain amount of stuff you can do on your site alone but then others that you can’t, so maybe you could bring some renewable energy on site.
In North America there’s very little grid utility renewable energies, maybe 12% whereas in the UK we are at about 40%. If you’re a medium sized manufacturer, the only way you really can get renewable energies in any scale is through a power purchase agreement. You get somebody to build a wind farm somewhere else and then give them a 15-20 year contract to buy energy from them, which means that they raise the money and can build a wind farm.
“The problem is the supply chain. The vast majority of the suppliers are small to medium sized manufacturers and they cannot support 20 year contracts, so they’re never going to get that.”
There’s this point where you need this big drop, maybe it’s 10% of the footprint, which is about switching to renewable energy, or electricity and you can’t do it on your own. Once we’ve got the data, we want to say, here are 200 smaller, medium sized manufacturers where total energy renewable energy requirement would be big enough to attract investors. Then we can securitize and mitigate the risk across it because there are 200. Now we can get somebody to build that wind farm and supply them with renewable sources.
Stage 2
Solving systemic problems through collaboration.
We’ve got the visibility and relationships and our supply chain and clients are hungry to see this kind of progress. The other examples of how you might replace hydrocarbon plastics, with plant-based plastics. Another one might be how you decarbonize thermal heating thermal processes.
These are often massive parts of the footprint in a supply chain by getting investment in green hydrogen as an alternative to natural gas. You can only do some of these things when you create scale and accelerate to market. We see the visibility that we’re creating as we build the numbers of suppliers on the platform, enabling us to leverage the data, the visibility of relationships and scale that makes some of these systemic breakthroughs.
Stage 3
We think we’ll be able to then report it to the financial services industry and in other places, by giving really reliable estimates on whether businesses and supply chains are on track towards these targets.
7. How are you doing good for the planet?
There’s still a lot we’d like to do in that area, but at the moment, I think trying to save society is enough for now. There’s a lot of enthusiasm in the team for doing stuff at a personal level, and we haven’t quite tapped into that yet. I think there’s an opportunity for us, and the team would like that.
We get a lot of feedback from a very large numbers of people, where some of that comes from being relentlessly focused on our supply chain clients and subscribers’ suppliers. I also make a point of participating in a number of technology innovation programmes that are completely outside of the business.
Firstly, there’s the Creative Destruction Lab led by Oxford University. I’m part of one of their work streams, and they bring in ideas from all around the world, provide mentoring and organise financing around climate and environment.
We also have a sister company called the Innovation Gateway, which in some ways does innovation sourcing around sustainability, and I’m on their board so I try and stay close to that.
INSTANT MARTIN INSPIRATION
1. What is your favourite book or blog and why?
2. Who is your favourite inspirational leader & why?
I have so many, but I’d say right now it is quite rightly President Zelensky of Ukraine.
3. What is your favourite app or piece of technology?
When in the Mediterranean, I’d go out on my boat. So, the tech that stops me from getting lost!
4. What is your favourite cocktail?
You can’t go wrong with a G&T!
5. What’s your favourite way to celebrate a success?
With my team, otherwise I will take my dog to the Wales/Shropshire border and walk there.
KEY TAKEAWAYS
1. Build a real action plan, a glide path, on how your company can meet 2030 targets
2. Experience isn’t everything for new recruits, a cultural fit and common ambition are
3. Change isn’t linear, so we need to act fast to reduce our impact on global warming
4. Investors are rapidly shaping and driving the sustainability agenda
5. Move from data collection and standards to action
6. Identify your gaps and work across your key suppliers to reduce this
7. Cross supplier and industry collaboration is imperative for scale
About Manufacture2030
Manufacture 2030 provides global corporations with the certainty they need to hit their Scope 3 emissions reduction targets, using our unique platform, to measure, manage and improve the performance of each individual site in their manufacturing supply chain.
About ProcureTechSTARS
Our industry is moving forward faster and faster, empowered by innovative, progressive digital procurement solutions created and led by inspiring teams. ProcureTechSTARS are the digital procurement company CEOs and Founders that are leading the change, they are entrepreneurs, engineers and architects collaborating to transform procurement and the enterprise. In an open conversation with these leaders Lance Younger will be discussing the highs and lows of building the future now, the challenges they’ve faced, their perspective on accelerators and hot topics, and what keeps getting them up in the morning (and keeps them up at night).
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