Supply chain and logistics management is much more than getting manufactured goods from factories in China to shelves in suburban America in time for holiday shopping. For some supply chains, careful management can be a matter of life and death. Take, for example, the risks in moving fuel and supplies to troops in landlocked Afghanistan. For every 24 fuel convoys that set out, one soldier or civilian engaged in the transport is killed, according to an Army study cited by the New York Times.
These are the extreme risks involved in managing one very important supply chain – and an example of the type of risk logistics managers deal with daily in the nation’s capital. Senior officials and supply chain managers from federal agencies, defense contractors, corporations and organizations joined together at an Oct. 5, 2010 roundtable discussion hosted by the Supply Chain Management Center at the Robert H. Smith School of Business. Participants talked about the supply chains within their own organizations and discussed the volatility they deal with in their current operating environment. They talked about what their organizations are doing differently than before to address volatility, and the emerging challenges they anticipate.
The discussion was led by Rick Blasgen, president and CEO of the Council of Supply Chain Management Professionals (CSCMP). It was the second of two such discussions (the first was at CSCMP’s annual conference a week earlier in San Diego), the results of which will be combined with a 300-company survey on supply chain volatility and distributed as an industry white paper in winter 2011. Participants included leaders from the U.S. Department of Transportation, U.S. Department of Agriculture, National Defense University, Lockheed Martin, Defense Logistic Agency, National Institutes of Health, NASA, LMI, U.S. Air Force, U.S. Marine Corps, U.S. Army, and McCormick & Co.
“The volatility in supply chain management is the new normal,” said participant John D. Porcari, Deputy Secretary of the U.S. Department of Transportation. “There’s a lot that the academic community can offer. In the job I’m in now, we’re living this every day. For example, we’re making sure that the troops in Afghanistan are getting the support that they need. We’re seeing it on the civilian side in our freight rail network and how it interacts with our ports and where the bottlenecks are. That’s very much an economic competitiveness issue for the country. This is a very important intersection of academic research, practitioners and national need.”
The roundtable discussion followed an overview session on a recently released book Smith’s Supply Chain Management Center spearheaded, “X-Treme Supply Chain Management: A Guide to Mastering Business Volatility.” The authors point to the new landscape of volatility, brought on by the financial crisis and recession, the credit freeze, skyrocketing fuel prices, increased globalization, war, terrorism, catastrophic natural disasters, and the green revolution all combining to forever change the way supply chains are managed.
“Old models of balancing supply and demand are no longer effective,” said research professor Sandor Boyson, co-director of the center and one of the book’s editors. “It is critical that industry and government leaders work together to address extreme business volatility issues in the global supply chain and we are happy we can provide the thought leadership to help guide some of those conversations.”
Center co-director Thomas Corsi, Michelle E. Smith Professor of Logistics, and senior fellow Lisa Harrington edited the book with Boyson. It was written in collaboration with CSCMP and co-contributors from some of the industry’s leading corporations and organizations. The book also includes a companion toolkit that provides practitioners with simulations and spreadsheets to manage volatility in their supply chains, which several of the roundtable participants said would be quite useful for their organizations. “We’ve learned here today that there’s a science to this,” said Redding Hobby, executive director of strategic programs and initiatives for the Defense Logistics Agency, which is responsible for provide supplies and services to American military forces around the world. “I appreciate the toolkit and am looking forward to applying some of that.”
“I think there are a lot of good processes that were recommended on how to address risk,” said Taylor Wilkerson of government consulting firm LMI, a sponsor of the roundtable event. “It is something that is important to the participants here and there is still a lot of work to do.”
The participants hope to continue meeting through additional sessions working group with the Supply Chain Management Center and CSCMP.
“This conversation was excellent -- we hope to collaborate more with our counterparts in other government agencies,” said Michael Kelly, Director of Supply Chain, NASA/Goddard Space Flight Center. “In some ways, the government is very big, but in other cases it’s a very small community. It’s just finding the right people within the other agencies, joining forces together. That would drive efficiency and make the government stronger and the industry stronger.”