Why We Need to Build Supply Chains

Enterprises are planning to rebuild their supply chains in the wake of the pandemic of 2020. 

Well, no, not really. 

Many enterprises are planning to resume production and boost inventories in the aftermath of the COVID19 pandemic.1 Some firms will narrow their product lines to those that are in high demand (e.g. toilet paper).  Others will stock up on raw materials and seek vendors that are nearer to their production sites as alternatives to risky international sources.

Not many firms, however, plan to build or rebuild supply chains.  I don’t blame them. 

Building a supply chain is not an attractive option, at least at first glance.  Most enterprises work within existing supply chains and would not outright see a good reason to build one that overlaps with other organisations. 

Enterprises would likely focus internally in their own operations if there’s any supply chain building that needs to be done.  And even then, enterprise executives would hesitate to do any major change if they perceive it would entail too much work and cost that wouldn’t reap much beneficial return.

Some companies in the past did try to rebuild their supply chains.  They called it “re-engineering” and it was popular in the 1990’s.  The idea was to redesign business operations from scratch and then apply sweeping changes to existing operations. 

It didn’t last long.2 Many companies ended up downsizing instead of changing.  A lot of people lost their jobs and companies didn’t realize much of any reward.  Re-engineering quickly lost its luster as fast as it was introduced. 

Some consultants, academics, and information technology (IT) vendors still push for re-engineering though they avoid the term.  Some pitch IT platforms such as Enterprise Resource Planning (ERP) to drive operations improvements.3 Alas, ERP and other similar platforms have not been as successful as hoped.   Many projects have fallen to the wayside

Many enterprises took to managing supply chains than into re-engineering them.  They sought talented people who’d know how to regulate inventories, negotiate with vendors, process orders, and make sure operations would comply with the latest environmental sustainability rules and occupational safety & health guidelines.  Executives also placed hopes that supply chain managers can lead in implementing new technologies such as artificial intelligence.  Supply chain management had become the norm.  Re-engineering was forgotten. 

Then the pandemic came. 

Enterprise executives know that supply chains need to change in the aftermath of COVID19.  And it isn’t just because of COVID19.  Before that, it was the tariff war between the United States and China that turned global trade upside down, not to mention similar disputes such as the British exit (Brexit) from the European Union.  There were also the supply and price fluctuations in commodities from metals, rare earths, to crude oil.  There were also the natural disasters. There were also the cyber-security data breaches.  And there were also the numerous upstart entrepreneurs who were introducing technologies such as drones, ride-sharing, video-streaming, and ecommerce mobile apps that threatened traditional businesses. 

Enterprises had to accept: supply chains, especially the global ones, were vulnerable.  They don’t work well in a disruptive environment.  The pandemic proved it.  All one had to see were the idle factories, closed warehouses, shut stores, and empty shelves.  The present supply chain set-up no longer applies. 

Building supply chains isn’t really that hard and expensive.  Sure, it requires investment but just like supply chain management, the key is talent.  One just has to employ the right people with the right talent.  The good news is that the talent is there in front of us, ready to work and available.  They are the industrial engineers; they have the tools and the skills and whom I’d rather call supply chain engineers.   

It’s not management but engineering that would drive the building of supply chains.  Engineers build things.  That’s their role.  Managers don’t do building; that’s not their role. 

The process of building supply chains is not too far off from constructing a factory or warehouse.  One has to have a plan, a timeline, and a full list of resources and costs.  And one has to have a engineer with the expertise and leadership to design and oversee. 

The difference lies in the nature and scope.  Whereas a facility such as an office and warehouse lies within the bounds of an enterprise, a supply chain encompasses the stream of products and services that crosses organisations and borders. 

A supply chain is like a river.  Build a dam and that’s a facility at a point in the river, with the purpose of harnessing the river’s water.   Building the supply chain involves setting up systems and facilities along the river to ensure the continuous and sustainable flow of water from start to finish. 

The supply chain engineer works not only with stakeholders within the enterprise but with stakeholders from other enterprises, such as but not limited to vendors and customers.  The engineer identifies and designs what needs to be built along the supply chain river. 

Most of what would be built first would likely be the networks and systems that link along the supply chain stream*.  The engineer would seek the optimal design that would synchronise and sustain flow that would uphold competitive standards of reliability, quality, and versatility. 

The 2020 pandemic is the latest in the series of 21st century disruptions to supply chains. It was the worst and it won’t be the last.  Enterprises who realize that their supply chains are vulnerable and need to be built with engineering talent would be on the right track to reviving their competitive edge.  

*Note:  I wrote a similar blog in LinkedIn in July 2019 in which I stressed structures in supply chain building. 

Supply Chains are All About Flow

Supply chains are about flow:  the movement of product from one stage to the next, from a starting point—a source—to an endpoint—a user. 

          We call them product streams, demand flows, pipelines.  But supply chains are hardly these as streams and pipelines imply a single fluid in motion.  What flows in a supply chain is not the one same item but a multitude of merchandise: parts, materials, components, and products. 

          Items also never remain the same as they weave through supply chains.  It is a basic point of supply chains that items change and never stay the same.  And not change for the sake of change but for the purpose of transforming to something that becomes more valuable from that where it came.  Solid ores become metals.  Metals become jewellery, spare parts, and the support beams for high-rise buildings.  Crude oil becomes petroleum which in turn becomes gasoline, motor oil, and plastics. 

          Supply chains converge and diverge.  They rarely follow a straight line.  Many see their items originate from other chains and disperse to others.  For instance, bauxite joins with caustic soda and other materials coming from other supply chains and are transformed together in a manufacturing facility into aluminium.  The aluminium in turn becomes material for other supply chains such as for cans for beverages, foil for kitchen wraps, and wire mesh for window screens.   

          Enterprises comprise most supply chains.  A fruit farm ships to wholesalers who ships to supermarkets and grocery stores.  In-between are transport providers and storage facilities. 

          Capacities limit how much can flow through supply chains.  The limits are also known as constraints and bottlenecks. 

          Policies, procedures, and controls govern the flow of merchandise through supply chains.  These vary from one supply chain stage to the next and to whomsoever has ownership of the territory the merchandise is moving through. 

          It should come to no wonder that flows are not steady or uniform.  Merchandise flows in fits and starts and in different mixes of product composition.  Flows are never identical from one instant to the next.  In a sense, flows may not even be the right word to describe what happens through supply chains as more often than not, merchandise moves in batches, surges, and waves. 

          Boosting productivity in supply chains is therefore a monumental challenge given the complexities and underlying uncertainties. 

          It would be easier to design a plumbing system and electrical schematic than it is to plan a supply chain.  At least with plumbing and electricals, the product stream is far more predictable and homogeneous.  It definitely is not like that with supply chains. 

The nature of supply chain flow by itself justifies the need for engineering prowess.  It is a daunting challenge but one that supply chain engineers are in the best position to undertake. 

About Overtimers Anonymous:

https://overtimersanonymous.home.blog/2020/04/30/about-overtimers-anonymous/

A Letter to All Industrial Engineers: Time to Rise Up

Dear Industrial Engineer:

          I come to you as a fellow Industrial Engineer (IE) with a message.

          It’s time for us to rise up.

          For years, or should I say decades, Industrial Engineering (IE) has been an un-recognized engineering discipline. 

          Many engineers—e.g. civil, mechanical, chemical, electrical—look at us as fakes. 

          Industrial Engineers (IEs) aren’t recognized as technically proficient builders or problem solvers at par with other engineering disciplines.  Even if many of us have professional licenses issued from places like the United States and Europe, we are not respected in many parts of the world.

          Most enterprises and organisations see us as more of management professionals than engineers.  They perceive the specialized courses we take, such as time & motion studies, operations research (OR), facilities planning and inventory systems modelling, as management subjects than technical specializations.  This is despite the fact that we are educated in advanced mathematics and sciences such as calculus, chemistry, and physics, and in engineering courses such as statics & dynamics, materials science, and electrical systems. 

          We are competent in reading and drafting engineering drawings and many of us know how to operate equipment like lathes, drills, presses, and milling machines.  We specialize in advanced statistical models such as linear/non-linear programming, queuing theory, and transportation algorithms. 

          Despite our engineering prowess, very few understand what IEs do.  We ourselves don’t have a clear picture of what Industrial Engineering is.  We’re always finding ourselves struggling to explain what IE is to our peers, co-workers, friends, and fellow family members. 

          The problem is with the title itself.  What does the “Industrial” in Industrial Engineer mean anyway? 

          People know what a civil, chemical, mechanical, or electrical engineer is just by the titles.  But with Industrial Engineer, we have to explain it and most, if not we, still wouldn’t get it. 

          True, many of us IEs, thanks to our training and experience, have successful careers.  Many of us have become top-notch executives and well-off entrepreneurs. 

          It would be nice, however, if we could just have a little more recognition and apply what we know as IEs.  And this is exactly what this letter is all about. 

          We are in the midst of the worst crisis to hit the globe since World War II.  The COVID-19 disease has ravaged communities and brought economies to a standstill.  Enterprises and individuals have lost earnings and incomes as people get sick or are forced to stay home.  Many products are in short supply as manufacturing and logistics facilities have become undermanned or short of materials.  Border closings have delayed or stopped deliveries altogether. 

COVID-19 is the latest and the worst in a series of adversities that has befallen supply chains.  It isn’t the first and it will not be the last.

          Year after year, adversities ranging from natural disasters, cyber-data malware, and trade tariffs have made life difficult for supply chains.  From the September 11, 2001 terror attacks to the climate change crisis, adversities have been buffeting businesses and societies.  They come small but frequently (as in daily traffic jams) or big and infrequently (such as typhoons).   They can come in the form of interruptions (e.g. power failure) or as a man-made business trend (e.g. a new mobile app that makes obsolete traditional package deliveries). 

          As supply chains have become global and more sophisticated, they have become more and more sensitive to adversities.  The challenge to supply chain productivity, and to enterprise survival, is very real. 

          We as IEs are in the best position to deal with adversities.  We have the expertise, the talent, and the tools. 

          For example, amid the crisis of COVID-19, we as IEs can help hospitals reduce wait times for patients via our knowledge of Operations Research (OR).  We can set up forecasting and inventory models to assist hospitals to avoid out-of-stock incidences for medical equipment and supplies.  We can help in improving schedules and reducing wastage in medicines and supplies. 

          When it comes to supply chains, we have the capabilities to analyse and improve the flow processes of materials and merchandise.  We are the experts in optimizing methods and in boosting the productivity of supply chain operations. 

          Before anything else, however, we need to upgrade our identity.  We should stop calling ourselves Industrial Engineers.  It’s too vague. 

          We should instead start calling ourselves Supply Chain Engineers.  Just as with other engineering titles, we need to be recognized quickly for what we do by what we call ourselves.   

          Because supply chains are at the core of global business, it’s time we see ourselves as Supply Chain Engineers.  We can build them, we can improve on them, and we can make them risk-averse and world class. 

          We have evolved and we should continue to do so.  Industrial Engineer as a title belongs to a time when manufacturing was prominent.  Today in the 21st century, supply chains are prominent.  Whether it be in products or services, there will be supply chains.  And we have the means, the skills, and the talent that earns us the title as Supply Chain Engineers. 

          The COVID-19 pandemic has demonstrated the vulnerability of supply chains.  It also has demonstrated the potential value of our vocation as Supply Chain Engineers. 

          We have the ability to change the world for the better.   We are Supply Chain Engineers.   We can make supply chains resistant to present and future adversities and deliver world-class productivity to the enterprise. 

          We have the power and we have the responsibility to demonstrate that power.

          Let’s show them what we got.    

About Overtimers Anonymous

The World Needs Supply Chain Engineers

Not leaders.  Not managers.  Not business executives.  We have plenty of leaders, both real and wannabes.  Managers and executives too; we have enough. 

We need supply chain engineers. 

The global supply chain is a present-day 21st-century reality.  We get much of our goods from all over the world.  We buy shoes from Europe to sell in America.  We ship rice to Australia and import minerals in return.  We travel to trade and we negotiate with our tablets and mobile phones. 

E-commerce has expanded the reach of supply chains.  We order and pay via the Internet.  More and more enterprises deliver door-to-door, business-to-business, person-to-person.  Transportation’s new normal is multi-modal: airplane-to-van, van-to-vessel, vessel-to-truck, truck-to-motorcycle.  Ordinary people ferry food and merchandise to homes as much as courier companies deliver packages to businesses. 

There is so much room for improvement that supply chain management has become a high-profile career choice.  But this is not a promotional message for supply chain management; this is a call for action.  Supply chains are facing challenging adversities and supply chain management, as is, is no longer capable to deal with them. 

Supply chain engineering is the “application of scientific and mathematical principles” for the design and synchronization of highly complex supply chain operations.  It is a field the world needs to synchronize supply chain operations and networks.    

It’s not only because supply chains have so much room for improvement.  It’s also because adversities have become too significant to ignore.  The adversities, which some may classify as supply chain risks, are real. 

Adversities in recent years have caused plenty of pain to supply chains.  They’ve disrupted transport, caused shortages of critical raw materials, and brought widespread inefficiencies.  As much as they’ve been manageable, the adversities are not getting any fewer.  In fact, they’re getting more disruptive and threatening.  To an extent, they can shut down supply chains and cause not only economic failure but also society chaos.  The most prominent example of this is the COVID19 virus pandemic. 

Just as we need doctors to deal with disease, we need engineers to deal with supply chain disruption.  Management as a profession and talent is no longer enough because management is only about planning, organising, directing, and controlling.  We need engineering, that is, we need to have people with skills to design and install systems, networks, and methods to synchronize and integrate the various supply chain operations and make them adversity-resistant. 

We need problem solvers that can define problems before they happen.  Anticipating adversity and mitigating it, if not overcoming it, are the key tasks of the supply chain engineer. 

Where can we find supply chain engineers? 

They’re closer than you think