5 Supply Chain Myths—Busted
Whether you have established your career or are just starting out in supply chain management, you'll come up against persistent misconceptions. Inbound Logistics puts five of the most common myths to the test.
Like any industry segment, the supply chain offers fertile ground for myths to propagate. Here are five of the most persistent supply chain myths, along with the thorough debunking they deserve.
Myth 1: Supply chain management is boring.
No way, say the folks educating the next generation of supply chain professionals. A logistics whiz may not become the hit of happy hour by spouting supply chain trivia, but the field—contrary to its bum rap—does not induce spontaneous comas.
Still, the "supply chain is boring" myth looms large among the general public, among college students looking for a major, and even among business professionals with spreadsheet expertise.
"The main reason is that they don't understand what supply chain is," says Nick Little, director of railway education at Michigan State University's Center for Railway Research and Education.
For example, when high school and college students begin thinking of career options, they are likely to link the supply chain with its less strategic jobs. "If Johnny went home and said to his family, 'I want a supply chain career,' they might answer, 'You don't really want to be a truck driver, do you?'
"The other thing that people sometimes don't understand is that working in supply chain involves a lot of trade-offs," Little adds—noggin-taxing trade-offs that require informed decision-making. That's true in every link of the chain, from product design, materials management, and procurement—"Do we go with cheap materials or something that is more reliable?"—to transportation and distribution. No part of the job can be executed on autopilot.
Supply chain's relationship to the entire business enterprise attracts Little. "Supply chain is strategic because it is so closely linked to the business model," he says. "Supply chain is touched by every part of the business and every part of the business is touched by the supply chain.
"The good thing about supply chain management," he says, "is that no two days are ever the same, and you don't know what tomorrow will bring."
Myth 2: You need an engineering degree to negotiate the supply chain.
Tell that to Lamar Johnson, who as a college student never dreamed that he would spend 15 rewarding years in supply chain management at a major brand.
"I retired in 2004 from Procter & Gamble but I had a finance undergraduate degree and 18 years in sales," he says. "When I retired I was managing all of the outbound portion of Procter & Gamble North America's supply chain," he says, adding that he was unusual at that time, a bird with different plumage in an aviary of engineers.
"What I brought to the party was a knowledge of our customer," Johnson says. "I had analytical skills—at one point I had been a math major. I also had very good soft skills: leadership skills, collaboration skills—all of the things you need to knit together not only the parts of your own discipline but also other entities within the company."
Johnson is now senior associate director of the University of Texas' Supply Chain Management Center at the McCombs School of Business. And he's all about reminding business leaders that supply chain professionals benefit from a strong foundation of business and communication skills.
"Most supply chain leadership historically has come from engineering; therefore they tend to value people who come along behind them that have an engineering degree," Johnson explains. "It's kind of a fraternity or sorority. I don't mean that to be unfair. I am saying that they value the skills that engineers bring to the party and sometimes discount the skills of people with backgrounds other than engineering."
That's changing, he says, and it's a good thing. Professionals with engineering expertise will always be an essential part of the supply chain equation but, "We need different kinds of leaders in the future," Johnson notes. "We need leaders who have strong business skills, analytical skills, and soft skills. If you take that on face value, lots of different backgrounds belong at the table."
Myth 3: Supply chains that rely on automation instead of people are always better.
"False," says Jack Buffington, who is responsible for warehousing and fulfillment for Colorado-based brewing company MillerCoors.
At least for now.
Buffington, who is also a professor of supply chain management at the Daniels College of Business, University of Denver, says it's not uncommon for business ventures to overvalue the automated supply chain.
Take the case of a celebrated technology company and its much-ballyhooed all-electric luxury vehicle. "The company obviously makes a good product that people want," Buffington says. "And as production has ramped up, it has had challenges meeting its targets. The reason why is the manufacturing facilities were overautomated. The company looked at what the big automakers were doing and thought, 'Well, that's good, but more automation would be better.'"
But that's not how manufacturing facilities should work, particularly on questions related to cadence—and to keeping things flowing consistently and in accordance with business strategy. When it comes to the big picture, "It's not about maximizing; it's about optimizing," Buffington explains.
"Automation is good for doing things quickly, but it may not necessarily be good for flexibility," he adds. "The company found that it needed to take some automation out of the process, because, as an overall system, it didn't work as effectively."
Such case-by-case thinking also should prevail in warehousing and distribution, Buffington argues. If the operation does not require troubleshooting or flexibility, a fully automated warehouse may be the ticket.
"Automated facilities are super efficient: Robots move pallets of product, they never take breaks, they take the same path," Buffington says. "But when orders get too complex, they run into some difficulties."
In fact, any time there is a change in plans, he notes, "you have to redesign the control system."
Complexity can certainly confound human beings, but unlike robots, they can puzzle their way through a problem. And at the very least, they can ask for help and advice, Buffington says.
Myth 4: In supply chain management, data—not people—rules.
Like most of his peers, John Magee, president and CEO of Houston-based 3PL Crane Worldwide Logistics, believes that data should inform decisions. But he also says that supply chain management is as much about craft as it is about terabytes. Without the former, the latter only gets you so far.
"Data paints a picture, but it doesn't tell a story," he says. "There are times when the picture is enough. But there are times when you need the story."
And that's where the craft comes in. "Data can be misleading if you don't know what you are looking for," Magee says. "If you look at a slice of information the wrong way, it can be bad."
A good supply chain professional always wants to know more. But it's also important to know what to do with all that data and to understand what is happening behind the scenes. That may seem like common sense, but it takes experience to put data in context.
Say a client complains that your firm's service is slipping. And the data supports that contention: It now takes 23 days to deliver a product, up from 22.
The data doesn't tell you what's behind that slippage—whether it's attributable to inefficient operations at home base, whether a carrier went out of business, or whether a natural disaster necessitated route changes. A response to the data, Magee explains, can only be crafted by someone savvy enough to ask the right questions.
With blockchain on the rise, businesses along the chain are ever-more committed to using data in decision-making. But, Magee says, "I am not so sure blockchain is going to become everything that people say it is." After all, the "garbage in/garbage out" rule still applies, and blockchain as envisioned depends on what Magee calls "flawless execution of integrated systems."
"People are saying they need more data, but they're still trying to figure out how to use it better," Magee says. And no matter how much data is on hand, one fundamental truth remains: When it comes to managing the supply chain, Magee says, "you can't take the craft out of it."
Myth 5: Cost cutting is the first goal of every supply chain.
As a working professional with warehousing and distribution operations to monitor, Jack Buffington of MillerCoors knows that cost pressures are real and require constant attention. But in his role as a professor, the preoccupation with reducing costs sends his blood pressure well north of healthy.
"The goal isn't to reduce costs; it's to reduce waste and improve efficiency," he says.
In fact, the supply chain might be one place where increasing costs makes sense. Spending a little to improve efficiency could pay off in increased sales.
"It's a bad way to think about things," Buffington says of the cost-cutting obsession. It can even backfire. "Too many supply chain people try to reduce costs and they end up actually increasing costs or impacting sales.
"Cost can help solve a problem," he adds. "If you increase costs, you can actually reduce problems and increase opportunities and grow markets. But the problem is we focus too much on the short term and lose sight of the bigger picture."
Well, that's not universally true. "The best supply chain people in the world focus on reducing waste, improving efficiency, and increasing sales," Buffington says. "Cost is a factor in those goals, but it's not discrete."