What Are Organizations Focused on Improving in Supply Chains in 2021?
The world we knew in 2019 has forever changed. Although global supply chains have grown more efficient through improvements in software technologies, cloud computing, mobilization, etc., many of the supply chains I’ve studied encountered are poorly equipped to operate a post-COVID world. During COVID, many of these organizations suffered from rampant inefficiencies that led to product shortages, facility shut-downs, as well as sudden shifts in customer requirements that leave products stranded, rejected or heavily discounted. Bloated inventories were written off as obsolete, while other product categories suffered from lost sales as component shortages shut down production lines. Capacity imbalances at different tiers in the supply base resulted shortages, booms, and busts. These problems were felt most heavily in the fields of healthcare, pharmaceuticals, industrial production, automotive and electronics.
In 2021, there is a tremendous amount of speculation around what a post-pandemic world will look like, with many industry decision-makers asking themselves: What will change and what will go back to how it was before? What is beyond speculation, is that the post-pandemic supply chain and manufacturing ecosystem will be vastly different. Over the coming years, there will be an increased focus on the global manufacturing dynamic, with companies weighing more and more the geopolitical implications – such as disruptions in supply, increased labor and material shortages, and questions around the sensibility of low-cost country manufacturing in developing countries around the world. The Biden Administration is also calling for the development of a stable domestic manufacturing base to support various needs of the US economy including: continuous demand for critical commodities, emergency needs for rapid product development, scalable manufacturing for critical supplies like PPE, and medical/pharmaceutical supplies to support healthcare in an aging workforce/
The unfortunate reality that we must also acknowledge is that our economy will be faced by COVID variants for some time to come. The idea of “returning to normal” is hardly something that we should consider in light of the rising ICU cases from the Delta variant. Already, a new COVID-19 variant – the Lambda variant – is being shown to be resistant to vaccines, which is keeping medical experts, public health officials, and health care professionals who are on the frontlines of the COVID-19 pandemic up at nights. Vaccines, test kits, and resilience of hospital supply chains will thus continue to be on the front burner, and our SCRC team is working on several projects in this area.
Against this backdrop, what are organizations focusing on in their supply chain efforts? A representative sample of concerns has been demonstrated in prior years by the selection of project topics in my MBA 541 class, that I kicked off last night. The following topics were on the front lines of what companies are focused on this year.
Diversity and Inclusion At least three companies are interested in exploring how their supply chains can become more diverse. Although the attention to diversity has increased due to the focus on Black Lives Matter during COVID, there is a much more important reason for the focus on diversity and inclusion. More and more organizations are focusing on diversity in their workforce and in their supply base for a very simple region: increased diversity in the workforce and supply base creates above average performance on projects. Diversity has been thought of as an “after thought” in many global corporations, and is often treated as an “add-on” to an enterprise’s corporate strategy. There are several reasons why diversity should be seen differently, as a core part of an organization’s strategy, and not as a simple “feel good” measure.
Supply Market Intelligence – more companies realize that they don’t know enough about their own supply chains. Several companies are working with our student teams to conduct predictive cost models, that can exploit publicly available commodity data sets, to better hedge and manage volatile costs in the market. Much of this is being wrought by the severe material and labor shortages we have seen this year – and organizations recognize they need to better monitor and understand the condition of their supply markets.
Effective Contracting Skills – one of our projects with the US Air Force will explore the gamification of contract acquisition training programs. The USAF recognizes that an entire generation of young mobile professionals need to learn in new ways, that encourage them to apply the skills needed to be effective in negotiating and managing challenging and complex supply chain relationships.
Creating an Agile Digital Supply Chain Organizations are seeking to create entirely new business models, that focus on sustainable localized advanced technology and manufacturing platforms, created with an ecosystem of best-in-class partners for any creator (brands, designers, influencers) to customize, personalize, co-create, test and deliver product in 48 hours or less. These types of challenges will require innovative new ways of integrating providers and distributors and designers in non-traditional ways, using analytic solutions that align key partners.
As always, we have a team of exceptional students working on these issues, and look forward to an exciting semester working on these challenging issues. Witnessing these students take on these problems gives me a lot of hope that we will get through the supply chain problems that have dogged us this past year.