CAPS Research Roundtable: Change, Resilience and Staying Vigilant

For today’s supply management leaders, the economy, cybersecurity threats, supply assurance, risk mitigation and resilient supply chains rank among top concerns and priorities.

At last week’s CAPS Research Spring Senior Management Roundtable, a cross-functional, cross-industry group of leaders gathered at Arizona State University (ASU) in Tempe, Arizona, to discuss and listen to experts on those topics as well as trends, research and strategies. The objective: to look at what’s on the horizon for supply chains while enhancing the companies’ supply chain journeys, said Denis Wolowiecki, Executive Director of CAPS Research, the Tempe-based program in strategic alliance with Institute for Supply Management^® (ISM^®) and ASU.

Wolowiecki (pictured above) noted that many organizations are taking a “relaxation posture” now that business is beginning to return more to “normal” and the coronavirus pandemic is waning. But that doesn’t mean disruptions won’t still occur. According to CAPS Research data, the highest risk for organizations over the next three years is cybersecurity/data, while the pandemic, which was deemed the highest risk during the past two years, is considered to be less so moving forward.

Companies must still be vigilant and strive for resilience, Wolowiecki said.

Banking on Change

The goal of any organization should be to creating a competitive advantage, said one of the speakers, Paul Ericksen, a Port Angeles, Washington-based supply chain adviser and author of Better Business: Breaking Down The Walls Of The Purchasing Silo.

To do so requires change, he said. However, executives won’t embrace change unless there is a business case that shows how their companies will benefit from it, he said. The pandemic made it clear that change is necessary to mitigate risk, he said: “When COVID-19 hit, no one had a Plan B. If you have risk, you need to have a backup.”

Ericksen described three types that can help organizations achieve varying levels of competitive advantage:

• Making changes in steps or tweaking something to make it better. This results in short financial benefits.
• The type of change, which requires more resources than incremental change, will deliver quantifiable financial benefits that will last a while, Ericksen said.
• Unlike the other two types, revolutionary change has nothing to do with current processes. It is a dramatic change, Ericksen said, and can be transformational.

Supply and Economic Matters

For some companies, change has involved embracing a “China plus one” policy, reshoring or nearshoring some sourcing and/or production to ensure supply, increase capacity and be closer to customers.

The phases of Lean Six Sigma’s DMAIC (define, measure, analyze, improve and control) model can aid in a company’s X-shoring initiatives, said Greg Collins, a supply chain management professor at the W. P. Carey School of Business at ASU. “A data-driven methodology to evaluate, plan and execute is a success factor for X-shoring initiatives,” he said.

Economic disruption also is causing organizations to change practices and processes.

The question continues to bubble up: recession or no recession? Maybe or maybe not, said Dennis Hoffman, Ph.D., director of the L. William Seidman Research Institute at the W. P. Carey School of Business, adding that the probability stands at 50 percent.

Economic factors are mixed, he said, with wage growth slowing down; inflation coming down; unemployment at about its pre-pandemic level; bank deposits falling; and monthly job creation, while still growing at a “decent” level, slowing down. Less spending, especially in the commercial real estate sector, could be barometer of an impending recession, he said, noting that housing inflation is flattening, and 41 percent of all consumer spending is by those 55 and older.

Disruptions, shocks and such events as the Silicon Valley Bank failure in March and the ongoing Russian-Ukraine war, impact not only the economy but influence the perception of where it is headed, Hoffman said. “Perception is big,” he said. “Chatter is big.” Still, he said, “the average economic interpretation is that Russia will end up with pieces of Ukraine,” with the conflict ultimately similar to that between North Korea and South Korea.

To learn more about CAPS Research and how to participate in such events as the CAPS Research Spring Senior Management Roundtable, visit capsresearch.org.