Sorting out the future of supply chain management and the role of logistics is a daunting task in light of the volatile global economy. Three luminaries in the logistics field, all emeritus professors, put their minds to what will be needed now and in the future for supply chains to evolve and contribute to economic growth and corporate well-being.
Dubbed the panel of “logistics legends,” Brian Gibson, professor of logistics and supply chain management Auburn University, moderated the discussion at the Council of Supply Chain Management Professionals' annual conference as John Coyle, Pennsylvania State University; Bud LaLonde, The Ohio State University; and Don Bowersox, Michigan State University, offered their views.
Four things are important to global supply chains:
Global supply chain networks
Global Supply Chain Networks: Global supply chains evolved based on low labor rates, low transportation cost, an assumption that quality was pretty even around the world, and the assumption that there wasn't a lot of interest in green supply chains or sustainability. The game has changed as far as global supply chain networks are concerned. We are going to have to achieve flexibility and agility for continuous change in our supply chains.
Risk Management: Risk management is not a topic I taught in my basic logistics course in 1965. We have to learn how to assess supply chain risk in some meaningful way and help to develop strategic plans and put them in place to prevent or at least mitigate risk. This applies not only to security issues that are often written about but also financial risk, operational risk, and finally political disruptions.
Technology: We're overwhelmed by technology, but we need to learn to harness the power of the systems and tools that we have and we have to particularly take advantage of solution networks, visibility tools, and decision support systems.
Sustainability: Sustainability was initially discussed in terms of green supply chains and the environment and ecology. Recently we've seen that sustainability can have a value-added role in helping organizations to reduce their costs and improve their value add and their profitability.
Logistics As A Discipline: Normally disciplines take 200 years to several centuries to evolve. In 40 to 50 short years, we've seen this discipline evolve from physical distribution management, with a focus on outbound, to logistics, where we connected the dots further back in production and purchasing and out to second and third tier vendors, and down to customers and customers' customers. And all the time that was happening, the focus became more global; it became more integrated, and it broadened the focus of this function.
Leadership: Academics historically provided thought leadership and, actually, governance. Academics also led business practice. Are academics still leading? Probably not, in my view. They're following best practice rather than leading best practice.
Linking Executives and Educators: We need scale. We're never going to solve these problems one at at time. It is going to take more than one or two people or one or two institutions to solve these problems. The Council of Supply Chain Management Professionals (CSCMP) could be and should be an honest broker on neutral territory bringing together business, academics, important issues, and restructuring the relationship with the academic community. If we're going to make a difference in the way the world works and in best practice, then we have to get on with this job.
Basics Meet A Changed World: We have a real threat in terms of our academic curiosity because when things get tough, there's a tendency to want to go back to the basics. Going back to the basics means going back 20 years and pulling out concepts that we pounded away at one time in the past and packaging them in new terminology and thinking that if we go back and do it again we'll get it right. But unfortunately the world that worked in at one time and the world where we are now are quite different.
What Is Logistics?: We need to understand what logistics and supply chain are and make sure our future leaders are ready to hit the ground running. I believe logistics is a discipline with a body of knowledge, it has constructs that explain inter-relationships, it has a framework to guide decisionmaking, and we've got tremendous empirical documentation that when done right, we can get products to the right place at the right time at the lowest total landed cost. And with every new evolution of new technology, we can do it better and better.
What Is Supply Chain Management?: I think supply chain management is a strategy. Some people want to make it a discipline, but I don't quite see how we take procurement and manufacturing and channel relationship management and customer relationship management and logistics and put it all together with the same nice tight structure. And one firm's strategy will be dramatically different from another in the same industry.
Leadership: 95% or more of the logistics function takes place outside of the vision of supervision. Whether you're in the back of the warehouse or out on the highway or making a call on a customer, there's no one there to tell you what you ought to do and how you ought to act. We've got to teach our people to learn how to step up and take responsibility.
Bowersox: Most everything we know and everything we hold dear in this field, the book will get rewritten over the next decade.
LaLonde: Problem solving tools and analytical skills are critical.
Coyle: We're going to have to be generalists . . .we need to understand the language of the board room. . . how the things we do in logistics affect return on investment and return on capital employed.
Impact of the Recession:
Bowersox: One of the biggest fall outs of this current recession is the return of functionalism. The accountants love that because fundamentally they measure functions. We talk about things that drive them nuts. We talk about functional trade offs and integration and that screws up year-over-year numbers. Let's not rest easy that the economists are there ready to cheer us all on. I'm afraid the accountants don't like a lot of the things we're involved in. They don't know how to measure some of the trade offs we talk about.
LaLonde: Companies are less likely to support training and education of their employees.
Why is it important to understand and promote logistics?
Bowersox: Society takes serious those things they understand and know are important.
Read more articles in Logistics Today's Digital Edition.