Supply Chains of Great Possibilities and a ‘Crisis Du Jour’

A headline in The Wall Street Journal in March succinctly captured the obstacle course, perhaps unprecedented in its degree of difficulty, that companies must navigate to get products from factories to customers: “Everywhere You Look, the Global Supply Chain Is a Mess.”

Although the supply management profession is plagued by volatility and uncertainty, it’s also a time of opportunity, said Tom Linton, a retired chief procurement and supply chain officer at Flex, a San Jose, California-based supply chain solutions provider. “The shift is going to be non-stop, so I can’t think of a career that’s more interesting,” he said during “The State of Supply Chain,” an April webinar hosted by Resilinc, a Milpitas, California-based provider of supply chain risk-management research and analytics.

Linton continued: “I don’t know how many students we have online, but if you were to ask the most exciting thing you could do for your career, I can’t imagine anything that would be more interesting than supply chains, because they are evolving so much.”

In the webinar, Linton, the 2019 J. Shipman Gold Medal Award winner for supply management career excellence, spoke with Bindiya Vakil, Resilinc’s CEO. They discussed such challenges as the coronavirus (COVID-19) pandemic, China, climate and cybersecurity, but also on the possibilities of emerging technologies and recent focus on the profession from the White House, including the executive order calling for review of U.S. supply chains.

“The people who are working in supply chain will be designing the supply chain of the future,” Vakil said. “It’s a powerful moment in history. … You look at the ability to invest in different regions and solve some of our supply chain problems. Instead of building walls, you’re creating opportunities. In many countries, (robust) supply chains can be a panacea.”

Bindiya Vakil and Tom Linton discuss a variety of challenges and opportunities in “The State of Supply Chain,” an April webinar hosted by Resilinc.

The stated objective of the Biden directive — for more supply chain resiliency — does not make a specific call for manufacturing operations to move to the U.S. However, sentiment for reducing dependence on China and other Asia-Pacific nations for such critical materials as semiconductors, pharmaceuticals and personal protective equipment (PPE) is undeniable.

The executive order and what a new supply chain geography could look like are the focus of a feature story in the May/June issue of Inside Supply Management^®. A potential outlook could be the U.S. leveraging relationships with its two biggest trading partners, Canada and Mexico. Linton, in the webinar, said: “A Pan American supply chain would be a (significant) change, where everything you need is a week away and can be obtained in a short order.”

There is no quick fix, especially with technology like semiconductors, Linton said. Cycle times for semiconductor wafers are 12 weeks on average but can take up 20 weeks for advanced processes. Also, building a semiconductor fabrication plant — also known as a foundry, or “fab” — is a complex, lengthy and expensive process because it must be structured with clean rooms and advanced technologies. As a result, fab construction workers with the necessary skills and training might not be readily available in some areas.

“To say that you can open the doors to a fab in two or even three years is a challenge,” Linton said. “So, the semiconductor shortage is going to continue because demand is outstripping supply, and governments are investing in other technologies (including defense systems) that require semiconductors, which is creating additional demand.”

Among other issues discussed by Linton and Vakil:

Africa. Rich in mining potential and a focus of China’s Belt and Road Initiative for infrastructure development, Africa is, Vakil said, “the next frontier … the final frontier” for manufacturing and sourcing. “Supply chains lifted many people out of poverty in China and can do the same in Africa,” she said. “But it’s a mindset issue for the U.S. — Africa shouldn’t be a place where we just do charity, but where we strategically invest in supply chains.”

Cybersecurity. This is a when, not if, issue for most companies, Linton said, because there are too many ports of entry for cyber thieves. “Supply chains need to prepare for impact, because it’s a connected world,” he said. “If you’re still in an analog world, congratulations — you’re probably not going to have a problem. You can try to do everything but wrap your company in bubble wrap, but resilience is key because there are too many machines and too many pathways for malicious actors.”

COVID-19. The vaccination-distribution success and lifting of public-health restrictions in the U.S. should not make supply managers blind to the virus’s continuing presence in other parts of the globe. With some countries not expected to have widespread vaccinations until 2025, there will still be COVID-19 threats to supply chains.

While procurement possibilities have few limits, so will the uncertainties — so much so, Linton says, that practitioners should have a “crisis du jour” mindset.

“I used to wake up every day anticipating some disruption,” he said. “I didn’t know what it might be, but there would be something to mitigate. Supply chain leaders should not be surprised and have crisis-response scenarios in their back pockets. That comes from visibility, knowledge and seeing the scenarios. So, if you want to drive your supply chain at faster speeds, you need to get better headlights.”