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[Music] hi folks uh doctor mudhasa ramada here with one more episode of the supply chain show so today i have something very special and very unique so the question is can you turn your obsolete inventory which is sitting in your warehouse for like years and years basically under dust of three inches which you hope one day you can sell it and i've seen it many times people hoping that we might sell it one day we might you know sell it at reduced price or do something package deal after sales whatever but the fact is you do not sell it so i've seen uh that very many times being a supply chain manager material manager as well and with some of the you know people i consult and advise as well so now i during the thanks to the world of internet and linkedin i come across to a very interesting idea where an individual and a company they are essentially taking your exes and obsidian inventory and me and turning into something very meaningful what i mean by meaningful is into a charitable course which is education which is right up my street and also helping this you know sustainability to the world right so i'll introduce you to claudia free hi claudia how are you i'm doing very well uh dr monsieur thank you very much for having me i'd like to quickly introduce yourself please to the folks very well so i'm claudia freed and i am the ceo and president of e.a.l green i am originally from argentina and i have been involved around the issue of education my entire life i have lots of stories to share with you but today we're really going to talk about this unique business model that i am really in a unique decision to share with because i've been involved from the very beginning and you're the ceo right now correct yes but more importantly besides uh now being the ceo i was the very first student that received a scholarship that was created by this exchange of excess obsolete materials converted into a scholarship excellent so now this is probably the great time if you can share what eal green does what is a business model how you turn the inventory into something gold yeah so um that's a great segue to talk about you know what is it that makes us so unique in 1982 a couple of entrepreneurs saw an opportunity to use supply chain as the practice of reallocating resources so based on principles of logistics and supply chain inventory management and the beginnings of the recognition that excess inventory and particularly waste will become one day something that businesses had to take a closer look at they came with this idea that you could have excess materials and in one side of the economy whereas another side of the economy was looking exactly for that product and not in a traditional sales but in a resource reallocation and now when we think about the world that we live in today with the circular economy we know that there are at least 10 activities all of whom begin with the letter r from recycle to reduce to remanufacture to re-engineer even to reject which is reduction of material that is going to waste and mr michelson and mr ross come came up with this idea of approaching businesses who had excess inventory obsolete and now returns and using supply chain to warehouse that temporarily in a fulfillment center concept and redeploy the excess material to college campuses in the exchange of reallocating product from those who don't need it anymore to colleges and universities they came up with a business model the platform if you will that gives value of that product once it gets to a college campus in the form of college savings which then become a scholarship okay so let give me some example is this specific to a certain material which you pick as access inventory then maybe i don't know sell those products or they use it so tell i think explain the rail let's call it information and material flow and also money flow how does it work so maybe with the example that would make more sense right so the the the way to think about the model so i can answer that in regards to the model itself uh products come into our fulfillment centers and they will come in different categories and conditions very very good reusable product that can go out the door for the extension of its useful life that can go to a college and a university because if you really think about a college campus even in the times of covid they're like a small city they have plumbing system electrical systems landscape systems food services dormitories so the products that we accept as a donation really range from small one-off to entire facilities rooftop hvac equipment we think of colleges as a small city the product that is not in prime condition because it could be damaged it could be a missing part or you may need repair that goes to our second channel which is the the repair and the resale channel and then the third channel for the product that is not entirely usable in its second use or can be repaired is recycled so we recycle from the wooden skids that we receive the pallets all the way to the cardboard boxes in which the product arrives to the plastic ties so those three channels generate scholarships for students operating income for the nonprofit so we are entirely self-sustaining we do not apply for grants or solicit individual donations of money that is the model no that that is interesting that make perfect sense so in terms of the three streams you have mentioned which is i think the one you mentioned is the recycle one is the resale one is the university actually as a city so they end up using those products could be electrical exactly could be fan could be could be wooden whatever right so which of the stream creates most value the scholarships the first one the first one the first one that is the the life extension of the product because in my case for example a company that you probably will know at ww granger was the first donor to our um social uh nonprofit they donated two motors the two motors were donated in 1982 there was the first donor that came into play and then we had the first institution so the first college and university which happened to be called north park college is here in chicago now they're called north park university but i was a student there the university received the donation of the two motors donated by our generous donor and the university rather than pay eal as a non-profit for the product as in a sale they receive that as a donation in kind and that means that that university just generated a modest savings in this case it was a five thousand dollar savings which instead of keeping it to buy more products necessarily they said we are now going to give a scholarship worth five thousand dollars to claudia right so they selected me as the first student excellent so okay that's great so basically the reason universities might be interested in buying your product because they are for example if the motor is ten thousand dollars they probably gonna buy from eal is five thousand right so they're saving five thousand they so there's a that's called commercial interest in approaching eal right but the value you have defined of this less called obsolete product is 5000 which is way under the value of the market right yeah but then what you can do is the 5000 rather than giving to you as a cash they basically give this money to a scholarship which you have received right correct and the interesting the interesting part about the model is that the the colleges are constantly looking for ways to reduce their operating costs yes and they are willing to work with an organization like eil because we have inspected that product so it may be scratched or dented or maybe the box is not perfect but when you are looking to reduce waste you open your mind up to thinking of products no longer as ways but how to create value under your question where do we get the most value is the product that can go directly to a college because that translates into a scholarship in my case i received one scholarship that changed the course of my life because it enabled me to get a degree in economics i then apply that degree of economics and getting my very first job it took me 11 years i became a us citizen during the course of the last 25 years i have been involved in a number of important civic activities being on board of directors and being part of the business community because i lived the example of how the model changed my life and we have done that for almost 19 000 other college students in the last 38 years that this point leads to my next question so can you please tell us about the the numbers in terms of the fund generated number of college students you have funded so far which we understand the valued overall value metrics and measurements and data have always been very important to the model because it's very unique model right we are dealing with product we are dealing with weight we are dealing with transportation the logistics aspect has always been core to what we do therefore we've always been measuring and the impact that we have had begun to be measured first in the social impact and now we are adding other metrics so the social impact for us has been a total of about 18 336 students from the very beginning of our organization uh we have to report uh 2020 accomplishments so that was uh as of the end of the year the second metrics is really the value that we have generated for all those students to be able to go to college and that is about 27 million dollars worth of eal scholarships that we funded 10 years ago we recognized that the ability for the recycling revenue and anything that needed to be repaired or resold could also supplement the inventory scholarship so we have generated about four million dollars in additional scholarships that come in the form of cash so all told it's about 30 million dollars in direct impact to colleges and universities and we have an average of about thirty four hundred dollars in the type of scholarships the beautiful thing about eil is that once that scholarship is created the colleges and universities decide who will be receiving that based on financial need we don't control that ah so you don't control that part so that who will get the scholarship is down to your university in the process of that correct okay yeah so that that that allows us to remain focused on what we are very good at which is the uh the conversion of the excess and surplus and scratch identity industrial inventory business uh inventory and supplies into value for scholarships another metric that you may be interested in is the weight so when we look at how we are now metric you know measuring environmental impact there are a variety greenhouse has gas emissions we talk about energy waste at the ielts we think about the actual physical weight of the product and at any one time and i was just looking at it before our call we have processed in the last 24 months about 400 tons of product that has been diverted from from going to either landfill or to end up uh damaging the environment so really we put through about 400 tons of product through creating value through any of one of these channels and for for um folks that are not thinking in terms of well what is 400 tons it it's about three football fields filled with cars so if you look at how many cars you can get on a football field there are a lot of other examples but some people compare it to how many whales or how many elephants we think about this is material that we are helping extend the useful life and divert from landfill so that's the environmental impact and i think that when it comes to the social impact and the transparency and the governance part of what we do we have managed all of our own transportation so we have since the beginning of this year put a transportation platform that allows donors to give us that responsibility so a donor says i have a trailer load of product we book it through our platform we either drop a trailer or go and pick up the product and we bring that into our warehouse so we are now beginning to track uh smart transportation as part of the added value toward the environment by using sustainable transportation partners that adhere to epa guidelines to continue the transparency through the supply chain and what we do no that's it that's absolutely absolutely fantastic you know i mean that's very that's very inspiring actually i mean i'm just listening to you and a lot of ideas are coming into my head and i'm just thinking why not many people do it i mean there's so much inventory and i lived in youtube 12 years and i i never heard of that concept maybe i was not looking looking looking fast enough right because what we used to do actually we used to sell it to those websites right because i have a blog actually on that website where you can sell your absolute inventory and they essentially you know we sell them like fraction fraction fraction of the price and they eventually sell it to the you know for example emerging markets as it goes to africa asia whatever right so they they do that and they they make money so why wouldn't we actually do this you know convert that into into some money so tell me let's talk about operations right now so yeah who approaches you so do you actively seek accident inventory so let's or or they come to you or combination of both then what is the logistics operation then who picked the inventory comes to a fulfillment center who bears the cost of all that so let's talk about the real making it happen yeah yeah um so then why not i think that because people um are too busy and they think that having a creative solution is going to divert from the operations when in fact when you integrate a solution like this it helps your operations because you put the process in place and you know that when you generate excess or surplus material there is an established channel and that really improves your your ability to get your important work done so people think this hard they just never take the time and to understand that it it it's like anything once you establish it it goes quite smoothly on the operational side do they come to us or do we go to them there are it works both ways we are trying to solve pain points for businesses so there may be a business that has a one-off a lot of a particular orange cones for managing traffic a college campus has cars and vehicles or they may have a product that didn't meet their packaging standards or maybe the packaging was done in french and they needed it in english so there are things that lead up to the the reason why companies generate access inventory are now an onslaught of returns so they either come to us because they have a problem or we approach them because we know that our colleges and universities absolutely need support in that area for example golf carts and vehicles to move around campus to do inspection now we're dealing with com with colleges and universities preparing for students to return to campus so how do we keep them safe what do we do about establishing quarantine centers do we need mattresses do we need a sanitizing material so the world of meeting the needs of both the the corporations and the colleges is really what brings us together and what happens is that whether they are coming to us or we go to them uh when there is a donor that is interested in supporting what we do by donating their product it's a very simple we first approach it from what are your logistics needs are you needing a regular pickup are you looking at doing a one-off where is the product coming from we use all levels of transportation intermodal short-haul backhaul we really establish a logistics first-class you know first-in-class kind of operation the product comes into our facilities and fulfillment centers and we just sort and assess the quality and we add value to that product by the process that we have established so how many people you have i mean how many different centers we have a total of 12 wonderful uh team members and so we have a very very very small environmental footprint considering the millions of dollars of benefit that we generate absolutely correct absolutely correct and we have kept it intentionally for example some three or four years ago when we rebranded we were previously educational assistance limited and in 2016 we started to recognize the environmental impact and the benefit of what we do and therefore we had changed our fleet of forklift and hunt trucks in the fulfillment centers all to electronic equipment to electric and battery operated we don't heat our warehouses so in the winter time is it's kind of a challenging work environment and therefore that's why we do not accept perishable products as donations but we have a large network of referrals so if for example the airline industry is looking at surplus food supply that they no longer can serve on an airplane because nobody's flying they offer that product to us we will immediately refer them to a local food bank to ensure that that product ends up going to a place even though we yell green um it's not um interested in handling perishable products right okay so what is your biggest challenge right now or in terms of growing or actually in general i we have a model keep growing to keep giving so we are like every business um really making an investment in a more robust erp system we are very very fortunate to be working already with microsoft on our business has always been an online business we didn't have to do a transformation to take our business from a store to online we have always been a virtual a placement marketplace for colleges and universities first it was via fax before that was via phone then fax and e-commerce now so we've already gone through that journey uh the biggest investment that we're now making is integrating our crm erp and e-commerce so that's that's a project that has been going underway this year we work with lots of software donor companies microsoft through techsoup so nonprofits really can access a number of tools that are available to for-profit enterprises and we just learn from the best from the linkedin community and our colleagues and yourself included what are best in class what are the best practices for an organization in in the supply chain environment uh the the second question that you ask is what are the challenges and they keep growing to keep giving as we have demonstrated with the covid pandemic and the subsequent economic pandemic the topic that is most discussed is the connectivity of the marketplace the college and universities are a subgroup that is very important to the economy and i believe that given the setup that we have in a higher education it's been very very difficult to know who is opening who's not opening are they opening virtually are they coming in to bring the college students on campus so we have two parts of our business model the donors that give us the supply and the demand that gets pulled from colleges and at the moment our business has suffered about a 21 decline from the beginning of the year considering that we never close one single day in illinois nonprofits were considered essential businesses um the the productivity has increased significantly but the decline is because donors are pulling back until they figure out what is happening with their supply chain yeah donors are looking to repair more things they're a little bit more uh conservative in getting rid of that product and those who have it they need the cash and so there is a tension right now about doing the right thing versus doing what is good for the bottom line and that tension exists but until you've asked this question earlier but you are registered as a charity or a business we are a c 3 non-profit organization and charity right right excellent excellent so just moving toward my my my last question actually um so what does the future look like what what do you see where the el i know this whole i love them keep growing you know keep keep growing to keep giving that is fantastic but you need to think bigger and better right so what so what are the opportunities in the pipeline right so there are a number of things that i believe are being lifted up by the context of the world when you think in large broad in a broad sense every business has by now heard of the sustainable development goals the 17 goals by the united nations every business that is a global player is looking at their supply chain circularity so all those other actors in the environment have given organizations like eal a voice when we were just advocating for the merits and the benefit of the model that we had we really were an outlier but now we're very comfortable in the conversations related to how do we look at the world in which we are looking to reduce waste or at least keep what we have already manufactured and keep what we have done living longer and creating value over a long period of time so what i think it's in the future we must realize that the systems that we now know which are the in-person learning we believe that that is fundamentally going to change i don't think it's going to be overnight but the concept of how do we rely on infrastructure to to learn and to live is is fundamentally beginning to change there are a lot of examples um so will there always be a need for an orange cone managing foot traffic somewhere well if i had a crystal ball i will say probably not however the key to what we now do is to develop the science to make sure that when that orange cone is done being useful the science exists to create that orange cone into something else that can be useful where and where does that science come from it comes from education yes there's a fantastic there's a fantastic talk i think claudia you have really inspired me i think definitely a lot of good ideas i'm sure i would like to stay in touch with you hopefully we'll talk again on some other topics and definitely i'll be i'll be following you so thank you very much for your time so folks if you have an issue yeah if you have any questions you want to get in touch with with you know with claudia she's on linkedin please follow if you like this conversation if you like what we are doing in the stm dojo and the supply chain show please like share subscribe as they they say please leave the comments on the topics you want us to talk about and i'll be in touch thank you very much ciao thank you simple keep it real thank you bye exactly bye-bye thanks so if you like this video don't forget to like share subscribe and leave your comments below