For the supply chain ‘ecosystem,’ a sea change: In conversation with Prof. Robert Handfield

It’s not just the “bad news” – natural disasters, political unrest, sluggish global economic growth – that should worry today’s supply chain professionals. The “good news” is a wake-up call of its own.

Technology is bringing businesses and customers closer than ever, with wearable devices and social media producing torrents of instant feedback. Cloud computing is making information more accessible. The result? We’re drowning in data.

Prof. Robert Handfield (pictured, right) has watched this wave of change approach the field of supply management and come to a simple conclusion: Surviving and growing in the field of global supply chain management today means more than acting differently than before. It means thinking differently.

Handfield, a professor of supply chain management at North Carolina State University who runs the school’s Supply Chain Resource Cooperative, is headlining the Center for Operational Excellence’s Oct. 20 Supply Chain Symposium (event full: center members, join the waitlist here). There, he’ll be presenting insights from his new book, The LIVING Supply Chain: The Evolving Imperative of Operating in Real Time. In the book, Handfield not only charts the challenges the field of global supply chain management is facing but outlines a new perspective he says is critical to survival, one drawn from an unlikely source.

In an interview with COE, Handfield discussed the change swirling in the supply chain world – and had tough words for what’s considered “business as usual” today.

COE: You’ve watched the field of supply chain management evolve for more than 25 years. How would you describe the change you’re seeing right now?

Robert Handfield: What we’re seeing right now is a combination of cloud computing, a mobilization of the Internet of Things, and the emergence of faster and faster telecommunications networks – not to mention the rise of social media. All of these are combining to create this massive computing power, producing massive amounts of information.

But what we haven’t been able to do is figure out how to utilize and exploit all the data thrown at us in a way that allows us to better manage the supply chain and manage global events. We’re seeing more weather-related issues, more government-related issues, and the level of uncertainty in managing the global supply chain is going up.

COE: What does all of this change mean for the kinds of skills that will be critical for successful supply chain managers?

RH: You have to have people who love to learn. In this environment, you have to be able to learn new technologies, new ways of looking at the world. We’re also going to need people who are very strong in terms of building relationships and negotiating contracts. Solid analytical skills are crucial, too – not just writing code, but looking at data and being able to derive meaning from it, translate it into a decision.

COE: Your vision of the “new rules” of supply chain management is rooted in a living ecosystem concept. How does this reorient the predominant perspective out there?

RH: We pulled this idea of an ecosystem from Sean B. Carroll’s biology book The Serengeti Rules. In the natural world, organisms need to coexist, they’re dependent, and if you mess with the health of one part of the ecosystem you get an oversupply or an undersupply and things break down. There are some really great rules here to apply to supply chains – but it’s going to mean a change in the way people work.

Today, most procurement people are out to crush their suppliers on price, and that’s it. Suppliers are trying to go around procurement, sell to stakeholders, make better margin. These kinds of behaviors have to change. We have to be thinking about not just what’s happening in our own enterprise but what’s happening with customers, with suppliers, with our suppliers’ suppliers. How do we maintain a healthy ecosystem where everyone succeeds, is profitable and is mutually aligned?

COE: You’re pretty serious about how important velocity is to survival in the supply chain today. What are some of the biggest roadblocks in the way for organizations wanting to pick up the pace?

RH: The old ways of working are standing in the way: “We can do that, we have procedures and policies we have to follow.” If you go back and look at why we have these, they’re just getting in the way. To gain velocity, we need to be connecting people looking at the same data together so they can quickly make decisions that will make things flow quickly through the system. When that happens, customers are happier, sales increase, and more working capital is available.

COE: You also place serious emphasis on integrity in the supply chain. To put it simply: What’s so great about being “good?”

RH: I believe it all comes out in the end. Organizations that do good in terms of building sustainable supply chains, improving communities where they’re buying, buying where they sell – they’re going to see the reward in the long term. It’s not just about being a good guy, a sympathetic character; it’s about business.

COE: Where do you see the role of operational excellence – specifically structured improvement systems like lean – in this forward-looking vision of the “living” supply chain?

RH: If you look at the idea of velocity, visibility is key: You can’t manage what you don’t see, and lean is really big on visibility. I see lean being really critical in bringing visibility to upstream and downstream supply chains and understanding what’s happening to the customer in the last mile. By making everyone aware of what’s happening in real time that gives them the opportunity to make decisions, to solve problems – and there are always going to be problems. You have to understand the customer situation in order to really optimize the supply chain, and that’s where lean really aligns.

Handfield’s presentation is the featured keynote in a half-day, morning event that includes networking time with Fisher College of Business graduate students, a follow-up presentation on supply chain data analysis from Aquiire CEO Mike Palackdharry, and a wrap-up discussion panel with leaders from Accenture, Cisco Systems and Kellogg Co.

Registration for this event is currently full but employees of COE member companies can join the waitlist.

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