Has Technology Made Supply Change Management Sexy?

Stephen DeAngelis

June 23, 2021

Some people think supply chain professionals labor in a boring profession. Kevin O’Marah (@komarah) writes, “‘Supply chain’ is a label with baggage. In some circles it is still seen as a low-tech, non-creative servant function hardly worthy of a Harvard MBA.”[1] And Chris Albrecht (@AlbrechtChris), Editor in Chief of The Spoon, writes, “There was a time when my eyes would gloss over at the mention of supply chains. No offense to this vitally important industry that keeps shelves stocked and stomachs fed. It was just that ‘supply chain’ conjured up images of corrugated boxes, trucks and people checking off items on clipboards.”[2] Such views seem to be changing. Journalist Jen A. Miller (@byJenAMiller) explains, “The pandemic pushed a lot of things to the forefront, including the importance of supply chain. Supply chain professionals, including the role of the chief supply chain officer, are more visible now.”[3] Albrecht says he has had an epiphany. “When I hear the words ‘supply chain’ now,” he writes, “I perk up and pay attention because there’s a good chance a startup is doing something innovative and dare I say, sexy, in the space. Supply chains are hot, y’all!” In today’s “woke” environment, calling supply chain careers “attractive” is probably more acceptable than calling them “sexy.” What has made supply chains careers “hot” are cutting-edge technologies. As the editorial staff at CIO Review notes, “With a technology-based supply chain, companies can better allocate vital products and supplies while saving money, time, and, in some cases, even lives.”[4]

 

Learning to Appreciate Supply Chain Management

 

Tech writer Kevin Casey (@kevinrcasey) observes, “2020 taught us that supply chain management is a vital discipline. … Effective supply chain management is crucial to individuals, businesses, and governments alike.”[5] He asserts that one reason supply chain management has entered the limelight is because technology means supply chain issues, IT issues, and national security issues are converging. He explains, “Many of the strategic priorities on the minds of CIOs and other IT leaders — think data and analytics, AI and machine learning, blockchain, and security, to name a handful of examples — are likewise playing increasing roles in supply chain planning and management.” He goes on to suggest five reasons supply chain management is crucial.

 

Reason 1. Supply chain management balances demand and capacity. Inflation is a serious concern as the country emerges from the pandemic. Inflation is rising because too many dollars are going after too few resources. Casey notes, “Even in ‘normal’ times, supply chain management is fundamental to ensuring that there’s a balance between demand for a product and the capacity to fulfill that demand. … ‘Just enough’ is the holy grail of supply chain management. … That’s basically the goal of effective supply chain management: How do we ensure that we can reliably and securely deliver what our customers need, when they need it, without wasting resources or creating other problems?” Cognitive technology solutions, like the Enterra Supply Chain Optimization System™, are helping supply chain professionals answer that question.

 

Reason 2. Supply chain management keeps profits up and prices down. Lora Cecere (@lcecere), founder of Supply Chain Insights, bluntly states, “The supply chain IS Business, not a department within a business.”[6] This was a lesson learned the hard way by too many business executives at the start of the pandemic. Casey writes, “Effective supply chain management is a profit maximizer. … The plainest, simplest way to describe the importance of supply chain management: Shoddy supply chain management is expensive, whether that takes the form of increased production costs, lower profits, lost sales, or prohibitively high prices. … While supply chain management is one of those disciplines that might sound boring, it’s intrinsic to the higher-profile parts of the business, such as revenues, profits, and customer experience.” If inflation is going to be held in check, supply chains will play a vital role.

 

Reason 3. A supply chain is only as strong as its weakest link. Casey writes, “One of the greatest supply chain management challenges is how many moving parts and pieces any given supply chain might entail. Supply chains are only as strong as their weakest or least-reliable component: One glitch can not only throw everything offline, but have cascading effects.” It’s an age-old tale, expressed popularly by the adage: “For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.” In today’s business landscape, you could replace “nail” with “semiconductor” and “kingdom” with “company.”

 

Reason 4. Quality and continuous improvement depend on supply chain management. “While you can boil supply chain management down to the balance between supply and demand,” Casey writes, “that may be too reductive in reality.” Supply chain processes require compromises between efficiency and productivity at every stage. Cognitive technologies can help decision-makers understand where these compromises are required and how they might best be implemented. At the same time, Casey notes, quality must be maintained. Technology can help achieve that goal as well.

 

Reason 5. Without supply chain management, the global economy would sputter to a halt. In spite of rising protectionist trends, most supply chains remain global in nature. Casey explains, “Talk about a ‘last but not least’ reason: The global economy would go kaput without supply chain management. … The pandemic has underlined this reality in bright red ink. That may lead to long-term improvements in supply chains to help them better hold up under dramatic conditions.”

 

Cognitive Technology and Supply Chain Management

 

Tech reporter Jack M. Germain asserts, “Artificial intelligence has made noticeable changes to technologies around the world. Perhaps AI’s most notable potential, however, is its role in the supply chain industry.”[7] The increased use of cognitive technologies is also what makes supply chain management an attractive, cutting-edge career. Many, if not most, supply chain pundits insist that supply chains must transform in order to be effective in the Digital Age. They argue that supply chains must be demand driven and, by that, they really mean they must be data driven. Germain explains, “AI has a twofold role in supply chains. The first is automating repetitive tasks and processes across supply chain functions. The second is realizing new forms of strategic decision making and collaboration.” He adds, “AI has tremendous potential to impact the global supply chain. It can do this by taking over time-consuming and error-prone manual work. This can involve AI more efficiently predicting demand, improving delivery times, reducing costs, and taking over customer support roles.” Those activities only begin to explain the ways cognitive technologies can assist supply chain managers to achieve their goals.

 

Because cognitive technologies help supply chain professionals make better decisions, some pundits believe it should be called “augmented intelligence.” Bain analysts, Michael C. Mankins and Lori Sherer (@lorisherer), assert if you can improve a company’s decision making you can dramatically improve its bottom line. They explain, “We know from extensive research that decisions matter — a lot. Companies that make better decisions, make them faster and execute them more effectively than rivals nearly always turn in better financial performance. Not surprisingly, companies that employ advanced analytics to improve decision making and execution have the results to show for it.”[8] Other pundits views cognitive technologies from an automation, rather than a decision-making, perspective. For example, Germain explains that Suresh Acharaya, a professor of practice at the University of Maryland Robert H. Smith School of Business, believes AI should become IA when associated with supply chains. Germain writes, “In the context of supply chain, ‘IA’ may be a better nomenclature for artificial intelligence. [Professor Acharaya] has started to refer to AI as IA or ‘intelligent automation’ instead. ‘There is some value in streamlining predictably repetitive actions — if this happens execute plan A, else execute plan B,’ he told TechNewsWorld. For instance, if there is not enough inventory, make sure it gets shipped to the highest priority order. These kinds of actions have been automated for some time and continue to be automated even more, he explained. ‘However, the power of AI is in predicting (or sensing) a possible outcome, long before it even happens, and recommending a proactive action,’ Acharaya noted.” The point I’m trying to make is that today’s supply chain managers must also be familiar with state-of-the-art technologies in order to their jobs well.

 

Concluding Thoughts

 

If you want to know why supply chain management (SCM) is an attractive career, David Essex (@dessexTT), Editor at Large at TechTarget, explains it this way, “It’s no exaggeration to say supply chains sustain life as we know it. The world has seen what happens when the unimaginable breaks them apart. SCM can put them back together.”[9] Supply chain managers need to understand how advanced technologies can help them “sustain life as we know it” and make their companies their companies more profitable at the same time. As Albrecht concluded, the combination of filling an important societal role using cutting-edge innovations makes supply chain management a sexy an attractive career choice.

 

Footnotes
[1] Kevin O’Marah, “The Semantics of Supply Chain,” Forbes, 5 July 2018.
[2] Chris Albrecht, “Are Supply Chains Sexy Now?” The Spoon, 23 April 2021.
[3] Jen A. Miller, “The pandemic brings supply chains out of the shadows and CSCOs into the spotlight,” Supply Chain Dive, 13 April 2021.
[4] Staff, “The Impact of Technology on Supply Chain Management,” CIO Review, 10 May 2021.
[5] Kevin Casey, “How to explain supply chain management in plain English,” The Enterprisers Project, 19 May 2021.
[6] Lora Cecere, “Sage advice? Only for turkeys.” eft, 1 February 2013.
[7] Jack M. Germain, “AI’s Potential to Manage the Supply Chain,” Tech News World, 30 October 2020.
[8] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.
[9] David Essex, “Guide to supply chain management,” TechTarget, 10 November 2020.