How 2020’s Toilet Paper Crisis Started A Much Needed Change In Supply Chain

Couple of weeks ago, I found myself having an intriguing conversation with my doctor during my routine checkup. The topic was nothing related to my health. It was about my work in supply chain and the recent transition from automation/ process digitalization technology leadership to supply chain leadership. My doctor excitedly said that it was great to know someone who is in the supply chain - as if this profession is something heroic. She went on saying she had no idea what the supply chain is until COVID-19. She said in the last couple of years as she started reading articles about supply chain, watching videos, listening to podcasts about supply chain issues and personally facing a whole lot of that issue in her medical practice and personal life, she almost had an epiphany.

I have heard the same talking points many times recently - what started with the toilet paper crisis, has changed the world. It has definitely changed how we view and value what is important. This is how transformation starts and fundamental changes happen. Seeds of innovation take root in the fertile ground of our everyday problems and uncertainties. Global supply chain (GSC) was in much need of innovation and transformation. Now it is finally getting the momentum it needs.

COVID-19 was clearly not the first time we saw noticeable disruption in the supply chain. This chart below (Courtesy: Bain & Co.) shows clearly how in the past decade, again and again, we faced disruption in GSC. Yet what COVID-19 did, none of the previous could. It initiated a cultural shift in our thinking and made us realize how a modern society cripples without a robust, efficient and resilient GSC which provides all essentials for a functioning world.

An interesting study recently done by Moosavi et al shows how much the world has talked about GSC issues after COVID. A heat map contour from their work shows a vast number of topics that gained deeper attention including resilience and sustainability receiving the majority of funding in innovation and problem solving.

Majority of the initiatives taken so far to solve GSC issues can be summarized as in the table below:

I find most of the work very fragmented and disjoint solutions. Many of the strategies, as outlined by from all major consulting firms to the investment banking research teams to the White House, still miss the overarching long term guidelines and cultural shift in which we must provide even stronger focus going forward. Our current approach to GSC is still day-to-day problem solving, short term band-aid solution and at best niche innovation rather than an organized well thought out innovation driven transformation spanning across a networked global economy with solutions strongly integrated in the company's value chain. The following big bucket items are of dire necessity for next gen robust and resilient supply chain -?

End-to-end Digitalization

Digitalization coverage in the supply chain still lags behind its sister operational sector, manufacturing and production. Digital solutions may exist in parts and pieces of the supply chain but far from the entirety of it. Many niche and home cooked solutions exist for each firm but fail to provide robust and efficient data coverage and comprehensive integration with the enterprise resources. Lack of continued data and digital thread coverage results in lack of timely problem discovery, data driven understanding and innovative solutions that are actionable, measurable and achievable. The sheer geographical and system scale and big data requirement are by no means easy problems to solve. Much investment needs to happen in digitization of the supply chain if we were to have any shot at building a resilient, robust and efficient GSC.

Mix of Global/Local Integration in Value Chain

In search of ever demanding cost reduction, many of the production hubs moved to low cost center countries connected by global logistics networks. Large geographical separation and the sheer scale needed for such a model created fewer players and few but high risk modes of failure should any disruption happen. And our wish (or nightmare) was granted! We focused too much on efficiency and scale of a supply chain and neglected how to optimize between robustness vs efficiency, efficacy/accuracy vs resilience. Although each of them are not fully mutually exclusive, they clearly don’t compliment each other. A well designed supply chain must balance between robustness vs efficiency. Robustness provides better uncertainty handling while efficiency aims at accuracy and cost. To build such an optimal system, we must not rely on our overseas partners entirely. A balance of global and local mix of production hubs, hybrid logistic networks and a multi-prong strategic management scheme needs to be developed.

Long-term Investment in Knowledge

In the last few decades much innovation happened in the technology, IT, connected digital solutions sector leveraging big data and yet little of that found its way in GSC application, at least not to the extent it was necessary. We need accelerated innovation in the GSC space. The outcome is not going to be instantaneous. So leaders in GSC must continue to invest in innovation both internally and also with solution and research partners both in industry and academia to create next gen innovation driven solutions. Long term investment in knowledge generation is necessary. Leaders must keep a long term view to achieve the desired goal.

Leadership and Talent Development

COVID-19 showed everyone the hard truth of when the supply chain fails at a massive scale across the board and globally. This means massive opportunities. We must ask - does the best and the brightest talent want the supply chain to be the most sought after career of choice? To solve the complex problems in GSC today, we need top talent. Top talent requires top investment. How do you think Silicon Valley was able to attract the best engineers? How did they even get so many people wanting to be engineers? There was methodical investment to create those top talents. It just did not happen. Same goes for any other premium profession. Unfortunately, the GSC career is trailing behind. Current leaders can borrow the Silicon Valley playbook and implement a tried and tested strategy. We need leaders in the supply chain, who not only have great leadership skills but also broad and deep functional skills and innovation driven problem solving mindset. It is a tall ask to have all of that but solving a complex problem of this magnitude requires the brightest minds of the world. Any less than that won’t suffice. We must make the GSC career more premium and attractive to top talent and invest in the growth of promising leaders.

Keep the Momentum Alive

Production, manufacturing and supply chain have often been viewed as cost centers to a company rather than value centers. Squeezing out efficiency by reducing cost was the focus. Moving those cost centers to lower cost regions of the globe also created a perception of lower value in our mind. So even when various scales of disruption happened, we happily ignored the signs. The interesting part is supply chain and logistics are fundamentally a large portion of a company’s internal value chain and yet we delegated a large portion of it, if not all, to someone third party and only slapped a transactional value to it. Now we know the severe and adverse side-effects of it. The next generation of supply chain leaders must proactively act to keep the momentum of high value for GSC alive. Discussing more, seeking innovation, developing talent, engaging people to generate more interest in the supply chain must be continued. It can’t just happen, it needs to be designed, and planned and executed with surgical precision.

As you see, toilet paper does have the power to change the world!

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