The supply chain professionals of the future will need to embrace data driven decision making and tech-enabled risk management.
If supply chain professionals were asked to describe the last year in one word, they’d probably choose a word like “challenging,” or “unprecedented.” They’d be right, but they’d be putting it mildly.
The circumstances brought on by the pandemic enabled simultaneous failures to ripple through global supply chains. The results were evidenced in everything from brief episodes of scarcity of consumer goods to ongoing sea container shortages, along with reduced ocean carrier capacity.
The pandemic isn’t over and there are lessons yet to be learned. But one thing is clear: logistics professionals must become better versed in managing black swan events. Luckily, North America’s best business schools are already incorporating those lessons into their curricula.
Evolving Industry Education
Matthew Boyle reports for Bloomberg that as the pandemic forced global supply chain snafus into the spotlight, young business professionals took notice.1
A year spent hoarding basic consumer goods like flour and toilet paper—or a week spent watching the Ever Given list and founder as a single excavator sought to free the 220,000 tonne ship—has laid plain the fragility of the lean global supply chain.
In response, as the concept of supply and demand requires, schools are introducing new certificates and degree programs in everything from supply chain risk management to supply chain resilience.1
“It’s not like we don’t cover risk already, but this would give [students] a deeper dive,” Kevin Linderman of Penn State’s Smeal College of Business told Boyle.1
Boyle also quotes Hitendra Chaturvedi, a supply-chain management professor at Arizona State University’s W.P. Carey School of Business, who says “the problem was that supply-chain education and theories had grown as rigid as some of the practices out in the real world.”1
Surely, following the pandemic, students will have enough real life case studies to last them a lifetime of analysis.
Risk Management Chief Among Desired Skills
For years, comparatively little truly shook global supply chains. Weather events and earthquakes gave pause to certain flows of goods, but nothing on the scale of the pandemic.
Now, with such significant disruptions in very recent memory, students and new grads must pay special attention to risk management and mitigation.
This aspect of supply chain management will certainly involve the application of new technology driven by artificial intelligence. AI will allow proactive modelling of myriad scenarios and the development of response plans so that, when the next tanker runs aground or the next pandemic grips global trade, supply chain managers will have a better idea of what to expect.
Data yielded by AI models and real time connectivity down to the container level will play a central role in supply chain organization, informing every aspect of supply chain design. The ability to master AI technology will be a necessity for supply chain professionals in the coming years.
Designing Resilient Supply Chains
“Students who pursue supply-chain degrees this fall are certain to get an earful about the limitations of just-in-time inventory systems,” writes Boyle, “which grew in popularity during the 1990s as companies aimed to mimic the success of automakers like Toyota Motor Corp., the gold standard of lean manufacturing.”1
As Boyle notes, lean manufacturing is precisely what undermined the supply chain’s ability to respond to disruptions.1 Professionals entering the workforce will be faced with a monumental task: design a supply chain that is resilient and abundant without becoming bloated.
Warehouse space is at a premium in Vancouver’s lower mainland; port congestion drags on globally; the container shortage makes it incredibly costly to move goods. This is not a supply chain prepared to handle widespread “just-in-case” manufacturing, which stockpiles excess inventory in case of emergency.
Supply chain professionals will be required to find a new balance between just-in-time and just-in-case product flows, and this balance will need to be sustainable for long term operation at a market competitive cost structure. After all, you never know when the next black swan event will strike.
Global Perspectives on Ethics
With pandemic supply chain disruptions came arguments in favour of domestic manufacturing. Today, there remains growing concern in North America about not only the viability of importing so much from big producers like China, but the ethics and sustainability of maintaining such a trade relationship.1
The concern is threefold: first, when China suffers so, too, does Canada and the United States (think port congestion, plant closures, product shortages). Second, the huge environmental cost of transporting such massive volumes of goods is becoming clearer and more important to consumers. Third, the ethical implications of forging a codependent trade relationship with a country known for mistreating its people and its workers must be considered.
This may be the first real pivot away from globalized trade since its inception. Mere discussions are a far cry from truly embracing domestic manufacturing—the viability of which is not even proven—but it has become clear that wholly relying on cheap goods from faraway nations is no longer a tenable approach to supply chain and trade management.
If you ask a stickler, they’ll tell you that the pandemic was not truly a black swan event because a sudden worldwide sickness was inevitable. But the pandemic was—and remains—a fundamental point of introspection for the profession of supply chain management.
The supply chain professionals of the future will thank the year 2020 for their deep immersion in data analytics, digitally-enabled risk management, and an ethical lens which will inform everything they do.
Supply chain management is very different today than it was just two short years ago, but this is a good thing. With every passing day, it becomes more nimble, more responsive, and better able to weather another unprecedented storm.