Supply Chain Roundtable: Leveraging DEI, Better Data for AI, and More

After having a lot to talk about in its debut last month, the monthly roundtable of experts from Institute for Supply Management^® (ISM^®) is back — because, after all, the news and its impact on companies and supply chains never stops.

With the Trump administration taking aim at diversity, equity and inclusion (DEI), our experts weighed in with advice for companies that remain committed to such initiatives. (For more on DEI, see the March/April issue of Inside Supply Management^®; the digital edition is scheduled to be released on March 11.)

Artificial intelligence (AI) will be a hot topic in the profession for the foreseeable future, and the panel discussed ways to ensure and enhance data quality. Finally, the experts discussed what they’re hearing from the supply management community, and what companies should be focusing — and spending capital — on.

The panel:

• Thomas W. Derry, ISM CEO
• Jim Fleming, CPSM, CPSD, Manager, Product Development and Innovation
• Paul Archiopoli, C.P.M., CPSD, CPIM, CMFGE, Subject Matter Expert
• Michelle Rohlwing, MBA, Manager, Product Development, Innovation and Learning.

Q: DEI has faced headwinds, particularly from the new administration, and some companies have publicly distanced themselves from such initiatives. For companies committed to DEI initiatives, how can they best leverage them? And how does DEI success provide a competitive advantage?

Archiopoli: By creating genuine culture of inclusion, companies can leverage DEI by creating a work environment where all employees feel valued, respected and heard. It has been my experience that when employees feel included and valued, as well as have a voice, they are far more engaged and dramatically more productive.

Rohlwing: I agree with Paul that the culture of inclusion for everyone — where all employees feel seen and heard and have the same opportunities — is important. While the current administration is taking a stance against DEI initiatives, in supply chain, most professionals think it is the right thing to do. Also, companies should be aware that even though there has been pushback in the U.S., many companies are global. And DEI initiatives are often included when evaluating, vetting and comparing suppliers. This is one way DEI can be leveraged for a competitive advantage.

Derry: ISM research indicates that diverse suppliers introduce more innovation than incumbent suppliers. It may be the case that the innovation is motivated by winning new accounts, but whatever the reason, buying companies would overlook this source of potential competitive advantage at their peril.

Fleming: News stories about companies that remain committed to DEI because “it’s the right thing to do” are beginning to emerge. Some of the best supply chains in the world (Procter & Gamble, Apple, Costco and Delta Airlines) are keeping focus on their strategies. Companies that strive for excellence often are the ones that don’t cower to adversity. They remain committed to a strategic future.

Q: Last month, we discussed AI, which requires accurate and reliable data. What should companies be doing to improve data quality?

Fleming: Many of the companies on the ISM Data, Analytics and Technology Committee have stressed the importance of governance. This goes beyond just supply chain and encompasses enterprise level focus (business units, finance, IT, sales, marketing and human resources). Each group has a dependency not only on data quality, but also data integration. Using a systems-thinking theorem, optimizing the entire system requires clarity of inputs and outputs from individual sub-systems. The benefit of leveraging AI in this process is the accelerated learning an organization can achieve.

Derry: In addition to the core data, users need to be aware of known weaknesses in applying artificial intelligence. A good example is hallucinations, which, in simple terms, are plausible but inaccurate results returned by generative AI. Hallucinations come from under-training models, from overfitting models, and other sources. Garbage in, garbage out will always be a relevant maxim, but understanding the limits and weaknesses of your AI model is another component in today’s environment.

Archiopoli: Data integrity and quality is the blocking and tackling of supply chain. Companies need to have a formal data governance process, cleanse the existing data (AI can help) and assure that their business process operates in a manner that ensures bad data cannot be entered into the system.

Rohlwing: The old adage about garbage in, garbage out is true. If governance and solid processes are not in place, data quality will continue to lag. Establishing a data governance framework ensures data accuracy and consistency. This involves setting up data standards, improving input methods and conducting regular audits. Improving supply chain processes ensures that data is accurate, consistent and reliable. Many companies use many different systems in their processes. Investing in a cloud-based data platform that integrates data from multiple systems eliminates data silos and provides a single source of truth for all supply chain data.

Q: In your conversations with the ISM community and supply chain contemporaries, which concern or trend comes up the most?

Rohlwing: Tariffs, inflation and AI tend to come up the most frequently. Tariffs are front of mind due to tariff threats by the Trump administration. Higher costs continue to challenge companies’ ability to make a profit. AI is considered a newer technology, and companies are scrambling to determine their stance and governance.

Derry: A prominent concern is a significant increase in compliance reporting. Just to highlight a few examples: A global company would need to be aware of the Uyghur Forced Labor Prevention Act (UFLPA) in the U.S., the Corporate Sustainability Reporting Directive in the European Union, and the Moden Slavery Act in the United Kingdom. The reporting requirements are not negligible, and frameworks for reporting largely have to be created from scratch. It’s a significant new expectation on type of our traditional commercial responsibilities.

Fleming: One theme that has been emerging over the past years is leveraging suppliers for innovation. While tariffs, inflation and geopolitical situations are making headlines today, more companies are engaging with suppliers to create win-win, long-term solutions to drive costs down and increase revenue. The focus on supplier relationship management improvement is becoming a more systematic approach to optimizing supply chains for the long term.

Archiopoli: While quality, delivery and service are “the price of admission” for supplier participation, at the end of the day, the fundamental mission of supply chain is to reduce total cost. Given the uncertain economic outlook (driven by massive deficit spending, high asset prices and elevated interest rates), cost reduction remains the highest priority.

Q: At this time, what is the smartest investment a company can make in its supply chain?

Derry: Developing an agile supply management strategy that focuses on the most important KPI for the business. What is most important to my business: Sales/market share? Gross or net margin? Inventory turns? Free cash flow? Each of these might require a different approach for necessary resiliency. For example, if maintaining or expanding market share is the company’s priority, stockouts must be avoided. This would suggest a dual-sourcing strategy that prioritized assurance of supply over lowest cost. A supply strategy that must preserve or expand product margins might prioritize utilizing suppliers in tariff-exempt countries. In short, supply management strategies must align with and deliver critical business KPIs.

Rohlwing: Going back to the discussion on AI, tools that allow quick data analytics for informed decision-making enables companies to be agile in this current volatile environment.

Archiopoli: Digital transformation and procurement automation are top priority investments because of ever increasing supply chain workloads that head counts are not keeping up with. The fast path to essential productivity is digital transformation and further automation.

Fleming: All of the items shared by Michelle, Paul and Tom are valid and require talent that can implement and leverage these. Employees with skills to enable digital solutions, analyze data and align to enterprise level KPIs will be mission critical.

(Photo credit: Getty Images/Edwin Tam)