SUPPLY CHAIN IS THE HEART OF BUSINESS TODAY, ITS PEOPLE ARE THE LIFEBLOOD

Some people still think of supply chain as a business niche, with limited strategic value. But, companies today need a fully modernized and integrated supply chain to be successful. It is no exaggeration to say the supply chain is now the heart of business.

Dale Rogers
ON Semiconductor Professor of Business, Arizona State University, Introduction
Some people still think of supply chain as a business niche, with limited strategic value. That was true for many decades, but businesses today are going through extraordinary changes, which require a fully modernized supply chain that is tightly integrated into the rest of the business. It is no exaggeration to say the supply chain is now the heart of a company.

Back in the old days, big companies like General Motors were vertically integrated and the supply chain moved slowly and predictably, contributing little additional value. Today, businesses often contract with more external entities, buying and delivering components from suppliers across the globe, and sometimes even outsourcing the manufacturing itself. They’re also engaging with a range of different divisions within those partners and suppliers, not to mention coordinating with multiple teams in their own company—like finance, accounting, and marketing. So, if supply chain is the heart of a company, the people that run it are the lifeblood.

There is a level of resiliency needed to react and adapt to whatever changes we see in the landscape.

Supply chain experts are in demand. I get to witness this first-hand. In 2017, we had 1,600 supply chain management students at the W.P. Carey School of Business at Arizona State University. And every year, that number grows.

These graduates are in demand because they are well equipped to handle the huge, disruptive changes happening today. The supply chain guru of tomorrow will have to do much more than figure out the most optimal way to move product. They’ll need to understand how the entire business works. It is the broadest business discipline you can study. It is a great career option and companies are eager to hire supply chain experts that can help them navigate the transformations every business is facing. They can help run not just an agile business, but also one that’s resilient—able to anticipate problems and adapt to change.

What is causing this disruption? There are two key drivers: technology and eCommerce retail.
A lot of the current disruption is driven by the dramatic reduction in the cost of technology, including hardware and software, as well as cloud storage and services. That cost reduction eliminates a barrier to entry that once protected larger businesses, allowing many more small, innovative startups to quickly apply pressure to older, stable structures and business models.

We’re fortunate to have so much innovation occurring in our economy today and we must embrace it.

Secondly, eCommerce has completely upended retail logistics operations. It requires a whole new way of thinking. For logistics, a business probably won’t have one kind of cookie-cutter warehouse facility. eCommerce fulfillment comes down to how accurately you can forecast demand and get inventory closer to customers, and that may require different types of facilities ranging in size, services, proximity to population density, and length of operation. The distribution networks of today and tomorrow are key to supporting the last mile of delivery—one of the most critical functions in eCommerce.

There is a third component, too. Aside from technology and eCommerce disrupting business and supply chain, there’s also the incalculable—the natural disasters that are impossible to forecast. But today’s supply chain experts—leveraging technology and agile principles—can provide strategic support by identifying risks of natural disaster or economic shocks and building plans to quickly recover from them.

We will never restore the huge U.S. manufacturing economy of the 20th century, though a lot of people would love to do that. We can’t go back, and we shouldn’t try.

For instance, when Hurricane Harvey was headed for Houston last summer, a company might have quickly determined that its risk was low, because it had no major suppliers in the region. But what about second- or third-tier suppliers? The company might not see the impact of the hurricane for another two months when its supplier can’t make deliveries. With today’s increasingly distributed logistics networks, visibility into the supply chain makes it possible to understand the flow of goods and develop alternative plans to keep them moving in case of emergency.

There is a level of resiliency needed to react and adapt to whatever changes we see in the landscape. Unfortunately, not every company is preparing for the changes and risks ahead. This will leave them vulnerable to competitors who are building completely new business models and hiring the talent to run them.

We will never restore the huge U.S. manufacturing economy of the 20th century, though a lot of people would love to do that. We can’t go back, and we shouldn’t try. We’re fortunate to have so much innovation occurring in our economy today and we must embrace it. And the thousands of skilled supply chain experts joining the workforce each year will play a key role in building the dynamic and resilient economy of tomorrow.