Busting 5 Misconceptions about Supply Chain Management

Jared Spool, the founder of User Interface Engineering, often makes the point that “great designs should be experienced and not seen.” The better the design, he says, the more “invisible” it becomes. He was mainly referring to website design, but his words could just as easily be applied to well-designed supply chain management.

This fast-growing discipline impacts every aspect of a product's journey to the customer, yet customers seldom know it's there — unless something goes wrong. And this invisibility has led to some common misconceptions about its role in industry.

The Sam M. Walton College of Business is part of a supply chain cluster in Northwest Arkansas that has made this region a hub for the industry's innovation. As the chair of the Department of Supply Chain Management at the University of Arkansas, I’ve seen firsthand how the public is increasingly realizing the greater societal value of supply chain management in sustaining our standard of living, improving healthcare access, and even defending human freedom. This awakening, however, has heightened the already existing gap in the most essential chain of the supply chain – talent.

A Deloitte study in 2018 revealed “that the skills gap may leave an estimated 2.4 million positions unfilled between 2018 and 2028, with a potential economic impact of 2.5 trillion.” And that was before the pandemic. Companies are now clamoring to find and fight for supply chain talent to address these challenges and revitalize thriving supply chains. But when supply chain talent is hard to find, executives who are seeking talent need to understand exactly who they are needing to hire.

With supply chain management’s new popularity, misconceptions about the discipline have become a daily fare. The longer those misconceptions persist, the more difficult it is to overcome these misconceptions and replace them with accurate understandings.?

If these shallow understandings are not addressed, supply chain management may fall to the same terrible fate of lean manufacturing or just-in-time production, which many people today incorrectly think of as referring to low inventory or efficiencies. Despite experts working for over 30 years to bust this misconception, headlines today read “Lean is dead” and “Just-in-Time Made the World Tardy.” Addressing misconceptions about supply chain management now is vital to the future of our discipline both internally and externally. I’ll start today with the top five.

No. 1: It’s just a longer way to say logistics, operations, or procurement

Businesses, programs, and organizations often group supply chain management, logistics, operations, or procurement together, or use the terms interchangeably. It’s further complicated by the fact that in Europe, supply chain management is often referred to as logistics management. Others myopically view it as simply “operations across companies.” But there is a notable distinction between the specializations.

Logistics is concerned with the coordination of storing and transporting goods on their way to the consumer. Procurement is concerned with the processes of buying goods and services from external suppliers. Operations is concerned with transforming inputs into outputs. Each is a vital part of supply chain management, but still only one part of a greater whole.

If supply chain management were a train, logistics would be one of the cars -- and definitely not the caboose. You also would see cars for procurement, operations, demand management, and more.

No. 2: Cost reduction is all that matters

This misconception is so powerful that you may even encounter experienced business professionals who believe it. It doesn’t seem like such a bad idea on the surface. Creating and distributing products is an expensive process, and who doesn’t want to save money? It’s a generalization, however, to see supply chain management as synonymous with cutting corners. A good supply chain manager looks for the most efficient and effective ways to do something, not just the cheapest.

Responsiveness, speed, quality, and innovations such as home delivery or grocery pick-up are also important factors in the decision-making process. Another value of increasing concern for organizations is social and ecological responsibility, and supply chain management plays a big role in implementing sustainable changes.

No. 3: It wasn’t relevant before COVID-19?

With the increased imperative to move personal protective equipment, sanitizer, and even toilet paper across the world, the COVID-19 pandemic brought supply chain management into daily conversations. In an episode of the Be EPIC podcast with Walton College Dean Matt Waller, Daniel Stanton (who is often referred to as “Mr. Supply Chain”), described the pandemic as a “teachable moment” and an opportunity to share “what supply chains are [and] where they work” with members of the public.?

Part of this educational opportunity involves a simple shift in perspective. Next time you’re at the grocery store, take a look at the wide variety of foods we can enjoy year-round. From steak, to mangoes, to feta cheese, supply chains give us access to goods that we otherwise take for granted. This vital work is overseen by the top minds in logistics, operations, and management, and it has been for decades.

No. 4: Anyone can do it

The supply chain management skill set is broad and can overlap with other parts of business, so it is easy to generalize it as just “good business instinct.” This couldn’t be further from the truth. For example, modern supply chain management relies heavily on data, and implementing insights from those numbers into valuable decisions and predictions requires specialized knowledge. It isn’t a field that just anyone could succeed in based on experience. As Rod Thomas describes, this specialized supply chain knowledge involves seeing the big picture, like how health providers take a holistic view of their patients’ needs.

This doesn’t mean that the supply chain career path is incompatible with other disciplines. Finance, communication, retail, and engineering experts all find places within the system that need their skills. The Walton College’s graduate-level supply chain management program is especially flexible for multi-disciplinary students finding their niche.

Andre Brewer, a production coordinator for Darling Ingredients, earned his undergraduate degree in political science, but found himself with two different retail supply chain roles. “If you were to look at that and then look at my degree, you wouldn’t think I’d be working in supply chain management,” said Brewer, who is now pursuing a master’s degree in supply chain management at the Walton College.

No. 5: It’s all about the numbers

Here’s another misconception with a grain of truth to it. Data is the lingua franca behind many supply chain decisions. Some positions, such as statisticians or data acquisitions, are dedicated entirely to analyzing numbers. But when you look at the big picture, the best supply chains are actually held together with a soft skill: relationship building. Every part of a distribution system requires cooperation from other parties, and even one weak link can lead to big disruptions.

Understanding each relationship and what it takes to maintain that connection is a skill that can’t be ignored or undervalued. Some have even said that supply chain management is all about relationship management. You can look at data as the railroad tracks upon which supply chains move and relationships as the couplings that hold each car together on the way to its next destination.

Supply chain management is one of the most important disciplines within the world of business. From manufacturing to distribution, from farm to table, each part of the supply chain plays a critical role in securing the success of the chain and creating a path to consumers.?

While it remains mostly invisible to the average person, supply chain management ensures that people across the world receive the goods they need to live their lives.