Bob Trebilcock: Welcome to The Rebound, where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi, CEO of the Association for Supply Chain Management, and Bob Trebilcock, Editorial Director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode.

Bob: Welcome to today's episode of the Rebound, Say Goodbye to 2021. I'm Bob Trebilcock.

Abe Eshkenazi: I'm Abe Eshkenazi.

Bob: Abe, we are coming to the end of 2021 and the last podcast of the year, and to quote Yogi Berra, it feels like deja vu all over again. We did this last year.

Abe: Yes, it does seem like a repeat. If we quote another oldie but goodie, what a long, strange trip this has been. I'm not sure that this trip is over, Bob.

Bob: I'm always good for a grateful dead quote. Great. I was looking over and one of the things your team has done at ASCM is to identify the top 10 supply chain trends for 2021. You and I probably don't have time to get through all 10, so I thought we could focus on just five of them, and not necessarily in order. Number one on the list was advanced analytics and automation. It was on the top of the list in 2020. What's your take on this and why do you think it's been top of mind for the last two years?

Abe: I think if we take a look at the acute situation and then some of the systemic issues that we've dealt with, I think we clearly see why this has risen to the top for the past couple of years. I think, also, as you review the rest of the top 10 trends, you're going to see that a number of them are really dependent on the advanced analytics and automation for their success. When we talk about agility, visibility, risk, or digital implementation, it can't happen without a solid foundation on the analytics and the automation. That's first.

Secondly, I think this is in response to the challenge that we've seen in, not only the bullwhip, but in the analytics that organizations are using to predict or to forecast what they and how they can serve their consumers and their patients in the marketplace. Right now, data is critical for a lot of organizations. Making sense of the data is even more critical. We have a lot of data coming into supply chain professionals and organizations.

Using the analytics to create greater visibility and make better data-driven decisions is a winning formula, especially when we combine it with the second trend on the staff side. If you combine the analytics and the automation with a qualified competent staff, I think that's a winning formula for a lot of organizations.

Bob: I just wanted to chime in here. One of the things I find interesting about that one because wearing my other hat, my modern materials handling hat, I cover automation inside warehouses and distribution centers and factories. What's interesting to me is that you had advanced analytics and automation together. For the next-gen event, we do a survey of attendees at the end on what do you want to hear about next year? At the end of 2020, robotics was hands-down the top of the list.

After the 2021 event, robotics is still on the list, but it's down in the middle of the pack of things I want to hear about next year. Talent, which we're going to come to next, was at the top of the list, but right under that was the analytics piece of it, AI and machine learning. They weren't that high up last year. I don't think the push for automation has gone away, I know that automation projects are going on like crazy, but it could be that all the automation projects are underway now so they're looking forward to what comes next.

Abe: I really think you hit on a key aspect there, Bob. That is the investment that a lot of organizations have made in their technology and the automation, I think, has reached the peak level but I don't see it pulling back. I think it's only going to see more investment in there. The next question that we have is the talent side. This moved up from number four on the list to number two on the list. Obviously, this is a topic that we've covered on a number of occasions, and it's finding and developing and retaining supply chain talent. As you indicated through your survey, you're seeing a greater push on it, a competent, capable individual. What else are you seeing in the industry relative to the organizations that you encounter?

Bob: I find this one really interesting. I know that for you folks, talent has been top of mind for a while and I'm going to come back in a second for why I said that. What's most interesting to me about this right now is it's hit the mainstream news that our friends and family are watching. It feels new to them. My older brother in Tampa will call me and go, "Hey, what's the problem with a warehouse worker?" How come the warehouses can't all of a sudden get workers?" Or, "Why aren't there any truck drivers? When did this happen?"

I started going back through my notes.

In 2015, I led a panel discussion on this topic at the ASCM event. I was rereading my introduction. My introduction was, "As I was flying out for your event, Harvard Business Review had a special issue in the new stand in the airport that said the war on talent." I also recounted that a couple of weeks before that I'd gotten a call from a plant operator in Wisconsin who began the conversation by saying, "I hate people." I was like, "I'm not a counselor, I'm not a psychologist, what are you calling me for?"

His point was that he was in an area with a number of other warehouses and manufacturing plants and people would just work for him for a while, and then quit and go down the street, and then quit and go down the street, and then come back to him. This problem has been top-of-mind in our industry, the little bubble that we all live in called supply chain for at least a decade. The truck driver issue, I did a presentation at a CSCMP event in 2018 on the truck driver shortage. It's not new to us, it is new to everybody else hearing about it, but as one supply chain officer said to me, "Everything you're hearing about what's going on before COVID, COVID just made all of it worse."

I think people in our area are just struggling. We're struggling to begin with, and are struggling just to get people and then that developing and retaining, which is so important, I actually think is their biggest challenge. I know it's hard to get people, but I don't know what perks in career development and things that you can throw at people to retain them, because it really does seem like retention is the biggest problem. It's, as I see it, at all levels of the supply chain, from the floor level up to data scientists and analytics and things like that.

I think it's going to be the ongoing challenge for our industry. I've talked to companies that are trying to do unique things like internships with colleges and mentoring programs and all of those things. I really feel like this is going to be with us for the near future, and the near future meaning three, four, five years to work itself out.

Abe: I agree with you, Bob. When you take a look at the historic challenge that we've had in attracting and retaining talent, I think that's, to your point, it is the summit. It didn't occur because of the pandemic, but now we're seeing it at every level within the supply chain, from the entry-level to mid-career to late-stage leadership opportunities. The need for qualified and competent talent is, as we've seen in the trend, it's risen to among the top issues for a lot of organizations.

I think this goes back to a key aspect for a lot of companies and that is, what is your number one asset? Most companies will tell you that their talent and their employees are their number one asset. Well, if you're doing asset rationalization, do you invest in your talent as your number one asset? I think this is where organizations can do a better job of walking the talk about their talents and their workforce.

Bob: I think that opportunity might be greater when you get at the corporate level, meaning things like supply chain planners and inventory managers and those types of jobs, as opposed to the line-level jobs. I think when we start talking about floor-level jobs, that really is where automation is going to come in because right now, working, this is probably heretical to say given the industry we work in, but let's face it, working in a warehouse or a factory is pretty both mind-numbing and backbreaking.

They're going to have to automate in order to make those jobs more attractive and be able to scale up without adding significantly more people. It's no longer about getting rid of people. It's about, A, being able to meet your throughput requirements with the people you have. You go to battle with the army you got, but then also being able to grow with the people you have or not having to add the same percentage of labor as you get in growth. I think that's going to be, at the line level, the big challenge for the industry going forward.

Let's move to the next one. I'm going to throw it out to you. Number three was visibility. Here's what I thought was interesting about that. It was new to your list, and yet as long as I've been writing about this stuff, people have been talking about the need for visibility, and so I wondered why do you think it popped up this year?

Abe: Really great point that you're making in terms of this has been like the holy grail for a lot of organizations. I think the impact that the pandemic and the virus had on us last year and this year has really highlighted the need for visibility. The majority of the disruptions did not occur on Tier 1 suppliers, they occurred further down the line where most organizations did not have the sufficient visibility or transparency into their supply chains. In some respects, we were caught a little bit off-guard. When we take a look at where the supply chains were prior to the pandemic, it was very effective.

Just-in-time was the hallmark for every consumer and buyer. High variety, reasonable costs, rapid delivery were the expectations of every consumer. E-commerce has only accelerated that expectation for consumers, so the visibility that we're talking about now for organizations is obviously taking a look at downstream where are your suppliers and where are your supplier's supplier moving much further down the line to ensure that you have sufficient information and data about the impact that any event could have on your supply side?

Then when we take a look at the demand side and what the impact that e-commerce has done to the consumer, their expectations have only grown because companies are now responding directly to the consumer and providing them what they expected before. I think this is one of the areas that we really need to center on, and that is consumers drive supply chains. Organizations respond to consumers and the buyers' demands, we don't create supply chains and then say to the consumer, "Well, this is the way that it's going to work."

It works in reverse. Consumers and the buyers determine that. There's where the level of trust comes in relative to visibility. Consumers want to trust organizations for doing the right thing and for providing them the right product at the right place at the right time, but also, we now need to extend that trust to your vendors and your suppliers. This goes back to our first discussion, they had automation and they had the agility for organizations to respond.

To ensure that you have that agility, you need to make sure that you have visibility into your extended supply chain. As he indicated before, companies are investing significant amount of money among their supply and their demand as well as the financial data. This will enable them to have better insights, faster decision-making, and hopefully better outcomes.

Bob: You just hit on two things. I want to hearken back to our listeners to the podcast we did a week or so ago with Lynn Torrell who's the supply chain leader at Flex, one of the world's largest contract manufacturers. I've dealt with Flex over the years and know that one of the things they really led the way, and it goes to a couple of the points you just made was in visibility. They were one of the early companies to put in an end-to-end platform where they can see on this wall of monitors they have where every order in their system is and what's happening with them on a criticality standpoint.

Is it going to be late? Is it held up somewhere? Was there a quality problem? It goes on both. It goes from the suppliers coming into Flex to Flex going out to the customers. The other thing that Lynn hit on that you just talked about was that need for trust between Flex and its suppliers because if the suppliers don't trust Flex, they're not going to bring innovation to Flex, Flex is not going to be a preferred customer, and at the same time, that Flex's customers and their customer's customer know what Flex is doing and trust that they're going to hit their markers.

I think it's a reason that companies that really are leaders in their industry have been investing in visibility for some time. They weren't late to the party, they were early to the party. Abe, I want to ask you one more, and this was jumping to Number 6, which was also new. It's something we're hearing over and over again. For some time, we heard about risk management. We've had Yossi Sheffi on. Yossi really made a name for himself writing first about risk management, and then he did a book on resilience because one of the things he realized was, well, it's great to identify at risk.

It's great to say, "Well, your house might burn down because you don't have a smoke detector." More important is how fast can you build the house back if it does burn down. Now we get to this notion of agility which is the idea to not just be resilient but to be able to be flexible, and adjust, and react, so you don't have to bounce back. Tell us a little bit about what you're thinking about agility and why it's on the minds of our listeners and your members.

Abe: Not surprising. I think this one has risen because of the response that we've seen to the pandemic, and also a lot of the historic perspectives on investment in the assets, fixed and variable. We're seeing dynamic customer demand. The data points are not only from the surges but from the shifts in demand. This requires organizations to be much more flexible and reactive to stay competitive. That's first. It is driven again by the demand side.

More importantly, we're finding that organizations don't have a one-size-fits-all perspective that agile companies need to increase their responsiveness to the shifts in demand and supply in the marketplace primarily driven by uncertainty. When you're seeing the inability to forecast out for an extended period of time, it makes it much more difficult to have fixed assets or investments that are for the long-term when you realize or when you're reacting to different changes in the marketplace.

The trend in agility is really a reaction to this increased uncertainty, shorter-term contracts that we're seeing, continuously innovating and finding different ways to serve your customers. This allows the organization to be flexible and respond quickly to the changes. I think one of the great examples that we found in our Rebound broadcast was the shift from GE Appliances from make-to-stock to make-to-order. If you would have suggested that prior to the pandemic, I think it would have been considered heresy within the organization, that you would go make the order on appliances.

Yet, this is embracing the short-term response that organizations are seeing to the shifts in the marketplace and saying that we need to fundamentally change what we do. In order to do so, you have to be flexible, you have to be able to respond to the omnichannel opportunities that you have, and more importantly, agile companies need to increase their responsiveness. If we're good on the automation, if we're good on the data side, and we're good on the visibility, now you need to enact it by being agile and being able to change and respond to the criteria that the demand places on you in the marketplace.

Bob: Let me ask you one more question on that point because you just used an example that I think illustrates the difference between resilience and agility. That's what I want to throw out to you. You used the GE Appliances example, which was that they realized they had to make the shift from make-to-stock to make-to-order. As Marsha said to us, they're still working on that but that's now the goal. I want to differentiate or get you to differentiate between resilience and agility because I think they sometimes flip together.

It strikes me that resilience would be the pandemic hits and GE Appliances says, "We have a make-to-stock order model. How do we bounce back from the pandemic and get that make-to-stock order model back on track?" versus, "Hey, the pandemic is changing things there. How do we shift gears and instead of make-to-stock go to make-to-order?" That would be agility. Can you explain the difference in your mind between the two?

Abe: Absolutely, Bob. I think this is one of the areas that we uncovered the responses that-- when we worked with the Economist Intelligence Unit, we wanted to find out how companies perceived responsiveness and agility. It was interesting to your point exactly. Almost half the companies indicated, "Do you know what? We need to get back to where we were. Just get us back to the same issues and challenges and opportunities that we were facing back in 2019 and then we'll be fine." I think that's the resilience part of it, "Just get me back to where I was."

I think the agility part is to say, "You know what? This fundamentally changes what we do, how we do it, and where we do it, and we need to respond accordingly." I think that's more on the agility side. I think that organizations have really struggled in trying to be more agile while being resilient because, obviously, you need to ensure the financial resources to invest into the future. The way to do that is to remain resilient, but to also invest in the future means that you need to change the way that you do things.

There’s where the agility smacks the resiliency hard trying to balance both of those to respond to the consumer needs, I think is a real challenge that we'll see played out over the next couple of years. Bob, let me jump you out to one of the questions that we're seeing or one of the topics here. This is kind of interesting. It's a new one for us as well. That's customer-centricity. We talked a little bit before about omnichannel and consumers and buyers driving supply chains. Give me a sense of how you perceive customer-centricity and what it means to you?

Bob: I love this one and love that it's new to the list. For about four or five years now. I've been publishing a series like one or two articles a year with Steve Melnick from Michigan State. If anybody knows, Steve, one, he's a quirky character, by his own admission. He's got this interesting way of looking at the world. Looking at it through a lens that I don't think a lot of academics look through. He's been trying to identify things that he believes are changing the way supply chains, as we know them, operate. That's going to impact the job of the supply chain manager of the future.

Three or four years ago, he did one on what he called the customer-centric supply chain. An example he used was a drug distributor down south who had a sort of low cost, one-size-fits-all supply chain, and thought they were doing a great job for one of their key customers because they were getting stuff there very efficiently and lower in prices. What was important to the key customer wasn't the logistics cost, but was a faster delivery, things like inventory management, all of which were going to add the logistics costs but were important to the customer.

He was talking about this mismatch between how we typically view our job as a supply chain manager, versus listening to our customers and managing our supply chains around what our customers need. Now fast forward. Last summer, I did an interview with Bobby Berg, who's the Chief Supply Chain Officer for Southern Glazer's, what used to be Southern Wine and Spirits. They're the largest distributor of alcoholic beverages and wine in the world. Bobby has been around there for, I don't know, about 20 or 30 years.

When I asked Bobby about the biggest change in the way he operates the supply chain, he said, "Oh, that's simple." He said, "We used to have a one-size-fits-all low-cost supply chain like most wholesale distributors." He said, "We put in a digital platform that now allows us really to customize what we're doing almost by the customer, even within a shift so we can really respond to the customer's needs." He said, "I don't want to say that cost isn't important. The cost used to be the number one thing and say the list of the top five that I was concerned about, and now it's number four or five."

He was just realizing that to keep growing, he had to be much more responsive to his customer. Both of the examples, Steve's example and Bobby's example are in the B2B world. In the B2C world, we've all been trained by Amazon where Jeff Bezos, famously, I don't know, one of his shareholder letters five, six years ago said he could care less about his stock price, he was focused on delighting the customer. I think Bezos put this in the water and in the ecosystem. As we've all become accustomed in our B2C lives of trying to get things the way we want and when we want them, it's now spilled over into our B2B lives.

I do think there will always be supply chains that are cost-driven, that won't go away. I think you're going to start seeing more and more supply chains where it's customer-driven, and perhaps within a company, you're going to find people operating both. To use the GE Appliances. GE does a value brand that's very cost-conscious. That's going to be, make the stock and just bang them out. Get them to Home Depot or Lowe's or whatever at the lowest cost possible, but they're also going to have the customer-driven, I want what I want, and I'll pay for what it is I want. They'll probably have to operate multiple supply chains. I really think that this is one of the future directions of our industry.

Abe: Bob, do you think we're the victims of our own success here relative to responding to the consumer demands? At some point, let's take sustainability, for example, there's a lot of discussion about it and a lot of rhetoric. We're not seeing it at a significant investment level. The consumers drive the supply chain. When do you think that we start to see that, again, responding to the marketplace and just-in-time, do you think consumers are going to have a different perspective in the future beyond just-in-time?

Bob: Wow, that's a fascinating question. I don't know. I'm not the only person to have said this. My wife and I used to own a retail store and we would see everything Amazon's doing, and we would say, "Well, it's just not sustainable. You can't make money that way. It's just not sustainable." We ran our store for 32 years but closed in 2017. The things that we thought weren't sustainable, they're even less sustainable; meaning, retailers are now doing more and more and more that they weren't doing in 2017 when my wife retired and closed her store.

I don't know the way around it. I think the big question is going to be, can supply chain start to differentiate and get paid for some of this? Because things like free delivery aren't free, right? Even as a consumer, I've got the experience of looking at, can I get it at company X for a $10 shipping fee versus Company Y free? Oh, I'll go with company Y. I don't know how we make that shift, but at some point, I think supply chains will have to figure out, what can they monetize? What will the consumer pay for? I've been saying that since my wife and I ran a retail store and I've been wrong so far.

I don't know. What do you think on that?

Abe: It's interesting because, again, as we discussed before, consumers, the buyer, they drive supply chain design and it's a response that organizations have. Are organizations willing to take that next step and say, "You know what? This is where our investments are going to pay off and we need to ensure that the consumers understand where value is." To your point, free is not free, somebody is paying for it along the way. The question is, are we willing, as consumers, to pay more for sustainability, more for living wages, more for ethical supply chains? I think this is part of the challenge that we have here, knowing that that's sustainable, and are we willing to make that commitment and that investment?

Bob: I don't know. It's going to be the eternal question. After all, everybody's griping about inflation right now. A lot of the inflation is being driven by not just higher fuel prices, but higher wage prices. We're now paying the higher wages to make the job more attractive, and it's driving up the cost of everything. Abe, I want to end with just one last question just to you. You hear from your members and this is the question that Peter Bolstorff from your staff always asks, which is, what's keeping you up at night?

Abe: It's quite a list, but let's stick to the job-side first. I think we've got a duality here among the key issues here. We're dealing with acute issues. There's no question that organizations see threats to their business lines, as well as to their employees and their survivability at every step along the way. The pandemic has exposed a lot of the fragility that we saw in supply chain, from surges to shifts in demand. We didn't respond as well as we could have as an industry. That's first - is that while we're dealing with the acute issues, we take our eye off the long-term issues that we've been dealing with for a long time, and this goes back to the sustainability question.

Economic sustainability, environmental, as well as ethical sustainability, has to be the hallmark for supply chains. I think this goes to, from my perspective, one of the macro issues here, supply chain is a global issue. It has local implications, but it is a global issue and we need to have a global response to a global issue. I think we saw from the beginning of the pandemic a regional or local response to a global issue is short-sighted. I think in some respects, we're seeing that within the supply chain, is that we're having a very provincial perspective that this is what's good for me.

If everybody does what's good for themselves, we'll be much better. That invisible hand concept here. My worry is that in the short-term response, we take our eye off the long-term issue and the impact that supply chain has on all our lives, both financially, environmentally, and ethically. I think those are the issues. Then lastly, we know that this is not going to be the last supply shock or the last demand shock that we have as an industry. While we are focused on providing low cost, high variety, rapid delivery for almost everything that we buy right now, we need to make sure that we are prepared for the next just in case.

It won't be like the last one and I think this goes to the points that we were reviewing through the discussion here in the top 10 trends, and that's agility, enterprise optimization, and a focus on your workforce, I think is a winning formula. As we move forward, I think we need to have a broader discussion about who's responsible for just-in-case. It cannot be on the back of the private enterprise and it can't be on the back of the government. I think there has to be a public-private partnership that responds in the future to these disruptions, whether on the supply side or the demand side. I'm hopeful that we've learned from the challenges that we've had in the past and put better decision-making and talented individuals in the right place to lead us forward. I think that would be a winning formula, Bob.

Bob: I think those are some great thoughts and a great place to end. Why don't you take us out?

Abe: Thank you very much, Bob, and thank you for joining us this year. It's been an extraordinary opportunity to meet and share some of the perspectives that we've had with our guests. We want to thank you again for joining us in 2021 and we hope you'll be with us in 2022 when bring out new guests and new episode for The Rebound. I'm Abe Eshkenazi.

Bob: And I'm Bob Trebilcock.

Abe: All the best.

Bob: The Rebound is a joint production of the Association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit ascm.org and scmr.com. We hope you'll join us again.