Supply Chain Roundtable: Continuing Discussion on Recent Hot Topics
The issues largely remain the same, but with so many new developments and moving parts, the monthly roundtable of experts from Institute for Supply Management® (ISM®) still has a lot to discuss.
It wouldn’t be a roundtable without the regular questions on tariffs and artificial intelligence — as those issues continue to dominate conversation in the profession. The volatile environment has made inventory management even more of a challenge, and our experts share their favorite supply chain reads.
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: The tariff “pause” earlier this month made headlines and moved markets, but significant duties — 10 percent across the board, those on products from Mexico and Canada, those on steel and aluminum and the out-of-sight levies on Chinese imports — remain and have major supply chain implications. What’s your read on the current environment, and is there anything to add regarding mitigation strategies?
Derry: What’s old is new again. The “anti-tariff” playbook is well known and somewhat limited: (1) Buy ahead — and there’s lots of evidence, including ISM data, showing that happened beginning in December, (2) “share” the tariff with the supplier, or more likely, get the supplier to reduce prices to offset the tariff — always a tough sell, (3) offset the cost of tariffs elsewhere in the business, (4) move to a supplier in a tariff-exempt country, though not many of those remain, (5) find a tariff-exempt substitute and (6) pass the cost to the customer. ISM reports indicate that passing costs is not being tried not so much to consumers, but more from suppliers to buyers.
Rohlwing: Even though the first major tariff in the U.S. was the Tariff Act of 1789, tariffs have been around for centuries to try to generate revenue and protect domestic industries. However, the volatility that has been created recently tends to create a pressure-cooker environment for supply chain professionals. The best strategy is for supply chain professionals to remain calm and do their best to collaborate and be creative with solutions over the end-to-end supply chain. Having multiple solution scenarios prepared can be helpful to be agile in today’s volatility. Either way, the emerging technology available today will help them to be prepared and agile.
Fleming: Tariffs have been the roller coaster of economic uncertainty in the past few months. But they are not new. Supply chains are adapting to oscillations, using their experiences from past tariff turmoil and the post-COVID-19 environment. Supply chain professionals may be a bit stressed, but corporations are looking to and depending on them to seize the day. Our profession has evolved strategically to tackle enormous challenges. Practitioners should look through the lens of business leaders — and create solutions that enable winning.
Archiopoli: Jim is spot on. The current economic environment is turbulent, but working in procurement and supply chain has always been (and always will be) filled with challenges. But as the old saying goes, “Every cloud has a silver lining.” I have been in and around supply chain for the better part of 50 years and have never seen a workforce of better qualified, credentialed and equipped people with productivity tools that, until recently, were unimaginable. Such examples include advanced planning systems, PO automation, real-time tracking, warehouse automation and holistic decision-making — all combined with amazing capability growth in data analytics and the technology that enables it. This combination of talent and technology fuels my unwavering optimism for the future of supply chains.
Q: We’ve discussed AI and generative AI, and another concept has emerged: agentic AI, which can think and act like a human agent, capable of independent reasoning and action. What are the potential supply chain applications — and the risks — of agentic AI?
Fleming: Agentic AI moves the world further into the Fifth Industrial Revolution, which is characterized as “a phase of industrialization that sees humans working alongside advanced technology and AI-powered robots to enhance workplace processes, increase resilience, and improve focus on sustainability.” Supply chain organizations that learn to embrace advancing technologies such as agentic AI will be able to accelerate success. Employees struggling to achieve strategic initiatives with the allotted resources and time is a real supply chain issue. Technology will play a key role in enabling employees. Yes, it will have a learning curve and adoption challenges, but all change does. The key is to think about possibilities versus worrying about unknowns.
Archiopoli: Agentic AI promises autonomous planning and optimization, automated/intelligent procurement and near-real-time risk management. However, it increases the risk of cyberattacks, data breaches, unintended consequences and, potentially, unclear accountability. Human oversight is not going away soon in most industries, but technology holds great promise. I think it’s akin to going from washing clothes in the river to having a modern washer and dryer.
Rohlwing: In a previous role, I led a sales and operations planning (S&OP) process, an area which I believe will be a great opportunity to use agentic AI to simulate different scenarios and create plans to mitigate potential supply chain disruptions. As with any type of AI, there is always risk involving confidentiality of company information. A governance plan should be prepared before implementation and proper training of employees before using these types of tools.
Derry: All I have to add is that agentic AI is being pushed by third parties as a means of increasing efficiency and making data-driven decisions, versus the human tendency to go with previous experience. There is tremendous promise, but I suspect that adoption will be relatively slow, while supply chain professionals and their employers both slowly come to trust “tech-augmented” decision-making.
Q: Inventory management is one of the more challenging supply chain disciplines, even in the best of times. How has that been super-sized in recent years amid unpredictable demand variability and supply shortages? What have been the most important lessons learned?
Rohlwing: Leveraging AI and machine learning can help to optimize inventory management. These technologies can help analyze historical data and external factors to help better predict future demand. Strong sales and operations planning processes can also help by promoting collaboration, creativity and communication among cross-functional teams. This also helps to create alignment between these teams, leading to better planning — and ultimately, more accurate forecasts.
Fleming: Inventory “right sizing” to meet business objectives to critical. Supply management leaders need to act as business leaders to find the sweet spot of revenue and cost when it comes to inventory. An important aspect is getting insight into the entire picture. Inventory within a balance sheet is tracked in three main buckets: raw materials, work in progress and finished goods. Many supply management organizations only have visibility into a portion of the inventory and can unintentionally sub-optimize the total inventory. Expanding focus drives better internal business partnerships and improves right-sizing strategy.
Derry: This is one of the most interesting and enduring behavioral changes in supply chain since the pandemic. Many companies were scarred by supply shortages — and, frankly, learned a hard lesson about foregone sales and losing market share to competitors as a result of stockouts or finding a component or ingredient hard to come by. We saw a surge of imports into the U.S. in December and January, and many believe this reflected a “buy-ahead” strategy before the imposition of tariffs. In general, there has been a shift towards emphasizing business continuity and revenue enablement versus the historical focus on cost. I’m not saying cost is not important, but many companies are willing to carry more inventory as a buffer against disruption. ISM recently published data reflecting this change. Could the pendulum swing again? Sure. But now, there is widespread emphasis on continuity of supply.
Archiopoli: Become an early adopter of technology: Implementing modern technology like AI-driven advanced planning, forecasting and procurement systems are powerful weapons to manage inventory to balance customer service and cost. Also, dual sourcing mitigates the risk associated with a single supplier, particularly one in another country. Finally, improving coordination and communication among supply chain internal customers should result in better visibility and inventory management.
Q: With World Book and Copyright Day commemorated on Wednesday, what is your favorite supply chain book?
Fleming: Being a supply chain nerd and having my Certified Professional in Supply Management® (CPSM®) and Certified Professional in Supplier Diversity® (CPSD®) Certifications, the CPSM Study Guide and Professional Series are still my most trusted source for supply chain theories and concepts. I leverage these books often in creating ISM solutions. I supplement my reading with Inside Supply Management® articles.
Rohlwing: I’ll go back to the archives for a book I read when I first got into supply chain: The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt and Jeff Cox. This book was first published in 1984 and had been around for a while by the time I read it, but it still holds up.
Derry: There are two academic papers I refer to frequently. The first is An Empirical Analysis of the Effect of Supply Chain Disruptions on Long-Run Stock Price Performance and Equity Risk of the Firm (2003) by Kevin B. Hendricks and Vinod R. Singhal. While the finding that publicly announced supply chain disruptions have a multiyear effect on depressing stock price is not surprising (although perhaps alarming), I find it intriguing that the same research found that stock price relative to peer companies began to underperform as much as a year before the announced disruption. To me, this indicates that latent knowledge in the supply ecosystem gets “out there” before the public becomes aware. The second is Supply Networks and Complex Adaptive Systems: Control Versus Emergence (2001) by Thomas Choi, Kevin Dooley and Magnus Rungtusanatham. Their essential argument is that supply chains behave like the murmuration of starlings — with sense and respond on a system scale — and supply managers should allow for an element of emergence in addition to the usual quotient of control in supply chain management and design. This concept feels very relevant in 2025.
Archiopoli: I’m a “classics” guy, with two favorites I still refer to quite regularly: Manufacturing Control: The Last Frontier for Profits (1973) by George W. Plossl, and Production and Inventory Management in the Computer Age (1984) by Oliver W. Wight. I think it’s critical for supply chain professionals to have a foundation in the fundamentals.
(Photo credit: Getty Images/Hispanolistic)