Many industries have had to evolve at a rapid pace in the past year, but I would argue one that has had to change the fastest has been the supply chain. While two words likely come to mind when we think back to 2020 and the supply chain—toilet paper—the long-term impact has more far-reaching implications for things like just-in-time manufacturing, sustainability, digital transformation, and the workforce of the future.
It is a conversation I recently had on The Element Podcast from HPE with guests Alexis Bateman, research scientist and director of sustainable supply chains at the MIT Center for Transportation and Logistics, and Mark Bakker, senior vice president, and general manager of global operations at HPE.
When looking back to the past year, Bateman suggests both the criticality of supply chains—her own dad suddenly realized what a supply chain does when he could not get something as simple as toilet paper—as well as social and environmental impacts of the supply chain. She says, “Not just the recognition of what they are, but the scope and scale of them globally, in many dimensions, that has been a huge change from 2020 into 2021, that it became on the radar. And there was such a clear recognition of what their role is going forward in terms of resilience and risk management, as we exit COVID-19 and are preparing for future disruptions and other opportunities.”
Bakker adds he too has seen disruptions happen from time to time in the supply chain, the incidents are often isolated to one factory or one country. “What was different last year with this is that it basically affected everybody and all supply chains from, pharmaceutical to toilet paper (consumer-packaged goods) to the tech industry. It affected all supply chain and in multiple countries and it spread, from the large manufacturing base for tech in China and Southeast Asia, to where we deliver products to customers.”
From our conversation, I had four key takeaways I would like to share.
Just-in-time manufacturing is a trend we have been talking about for years—something that began before even the pandemic hit, but as Bakker suggests the pandemic amplified the need to change in two critical ways:
- Trade tensions, protectionism in certain countries, introduction of import duties, and more led companies to think more about what is the right supply-chain network? What is the right supply-chain strategy?
- The Amazon effect—which I write about in detail in my new book Sustainable in a Circular World—has proliferated the world, with many consumers now used to and even expecting delivery in a day or two.
Bakker explains with new generations entering the workforce, those expectations from our personal life get introduced into the professional world as well.
The way our supply chains have operated for so long aren’t sustainable—both environmentally and socially, according to Bateman. Even more, our supply chains aren’t sustainable in the business continuity way. Thus, the definitions of sustainability and risk resilience are no longer separate definitions.
“They’re overlapping in the minds of many business folks that used to see them as different goals and different objectives,” says Bateman. Bakker adds that nowadays the conversation is around how do we balance all three of these very critical things: cost, resilience, and agility and the sustainability.
Of course, when we look to the future, there is a common element across all supply chains—data. Digital transformation has been accelerated due to the COVID-19 pandemic and the future will be ripe with information to make data-driven decisions, with the availability of high-performance compute, machine learning, AI (artificial intelligence), and more in the supply chain.
“It’s very data rich, but at the same time, pieces of the supply chain tend to speak in different languages,” says Bakker. “When you talk to a customer, you may talk about a product or a unit. When you translate that into the logistics world, they care more about kilograms. They care about pallets, containers, airplane, ULDs, things like that. When you go into the supply base, it goes into components and how many components and what kind of components do you need.”
The opportunity with digital transformation is to integrate all that data to have better access for analytics, predictive, prescriptive, and to make better decisions that will ultimately help to create more velocity in the supply chain, he explains.
Workforce of the Future
Here is what is going to be critical to tie all of this together—the worker. Being able to access new perspectives is going to be critical, which is why the workforce of the future is such a vehement discussion these days.
Bakker admits five years ago he would have never thought about hiring data scientists, but now that is exactly what they are doing. “We want to do more machine learning to be more predictable and to have a better look on what forward-looking demand we may expect in certain markets for certain products.”
When it comes to inspiring and equipping the younger generation to take up the mantle in the supply chain, he suggests as a supply chain geek himself, he can only give great encouragement to young people to think about supply chain as a career, as supply chain becomes a strategic asset for any company, has a seat in the boardroom nowadays, and influences corporate strategies.
Bateman adds the experience of working remotely has changed the dynamics of access and ability for folks around the world to collaborate and that many programs now have a digital credential for supply-chain professionals. “One big thing is that (supply chains) are always changing and they’re always innovating and they’re always advancing. You can’t have static knowledge around the supply chain.”
Give the episode a listen and let me know what your takeaways are. What would you add to the discussion when it comes to just-in-time manufacturing, sustainability, digital transformation, or the workforce of the future?
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