Managing risk seems to be the common denominator for any viable supply chain strategy. What are some of the risks that small or large companies should be most vigilant about?
Jonathan Biddle: The difficult thing about risk is that it’s always a moving target. It’s also an essential characteristic of an innovative company. Many companies try to manage away risk, but this makes them slow, bureaucratic, and ultimately uncompetitive. Rather than managing it away, companies of any size should focus on visibility to the knowable risks most impactful to their business and developing an agile approach to address unknowable ones.
The COVID pandemic is an obvious example of a risk that was both predictable and unpredictable. The predictable part was that some large event like this was likely to happen, but the timing and scope was unpredictable. Some predictable risks are interest rate changes, material shortages, delayed manufacturing ramp ups, and logistics delays. Focusing on materials, the predictable part is that there will be material shortages; this is inevitable. The unpredictable (or at least less predictable) part is which materials will be short. The wrong approach is to attempt to remove the risk by over indexing on forecast accuracy and blaming shortages solely on bad forecasts. The right approach is multifaceted and may include things like implementing buffers at the critical BOM nodes, multi-sourcing, and reducing product complexity.
I know this doesn’t answer the question directly about which risks a company should be most vigilant about, but those specific risks are dependent on a company’s supply chain structure and what market they are chasing. Evaluating your supply chain, determining the most impactful risks, and developing contingency plans is key.
Any areas of innovation you foresee with supply chain technology or applications in the next few years?
Jonathan Biddle: AI is the hot button answer, but I’m skeptical of the impact it will have unless LLMs can be grounded effectively in reality. It’s all great to be able to ask a chat bot where my order is or what potential issues it could face, but if I don’t trust the answer 99%+, it doesn’t add much value. Assuming the grounding problem will eventually be solved, the technology will be transformational. Creating reports and generating analyses could shift to the background with more attention on interpretation and decision making. Introducing effective and reliable AI agents into the mix could also automate tedious, repeatable tasks. However, reliability and cost will determine large scale adoption.
Additionally, a lot of innovation will start materializing that impacts the types of materials used in products and how they are produced. The push toward net zero or carbon neutral supply chains requires fundamental shifts in how things are made and how we source what they are made with. Breakthroughs are already happening, and as government funding kicks in and more companies apply AI to their engineering problems, the pace will only increase. Carbon fiber and graphene will be used more commonly in product development and will put stressors on the suppliers (and those trying to source at reasonable costs!).
The last 15 years have provided an amazing upward trajectory of supply chain jobs for undergraduates and graduate students across industries. Any insights or lessons learned on how you experienced your own supply chain career from manufacturing to a technology service industry?
Jonathan Biddle: My main advice would be to dig into the details and become an expert at getting things done. But do it in a way where you can always tie the details back to the bigger supply chain strategy and flow of the company or startup you’re working at. Supply chain is all about execution at its core, but I’ve seen a lot of younger graduates wanting to shift into strategy immediately. This is not a good long term bet because you end up lacking the experience that gives weight to your strategic vision. The more execution work you’ve done, the more you will understand the importance–and relevance–of the fundamentals, and you’ll be able to apply them to the bigger picture as you’re given the opportunity. It’s not about the number of years of execution work, but the depth and breadth of it that will make you more effective as you grow in your career.
Secondly, build good, genuine relationships wherever you go. They will pay dividends and advance your career more than you can imagine. Beyond career advancement, they make work more fun and can help keep you centered.