When asked if supply chain management (SCM) is simply moving stuff around quickly and cheaply, Yossi Sheffi, the Elisha Gray II Professor of Engineering Systems at MIT, smiles and poses his own question: “Are you crazy? It’s life. Everything you buy depends upon it.” Supply chains also create millions of jobs globally and “at salaries about equal to manufacturing jobs,” says Sheffi, director of the MIT Center for Transportation & Logistics (MIT CTL). And supply chains are relied upon to save lives during natural disasters.
“Look at Haiti,” Sheffi says, speaking of the devastating 2010 earthquake. “The whole world was willing to contribute aid, but you had one small airport that could handle one plane at a time. How do you manage getting the right stuff to the people who need it most? How do you make an impact and sustain it?” It’s maddeningly complex, he says, not just in terms of technology but in coordinating decision-making. “That’s what humanitarian logistics is all about: communicating, coordinating, optimizing, and much more.”
Sheffi emphasizes that the possibility of disruption to global supply chains is ever-present, as is the challenge of making supply chains resilient enough to recover from disruption. “How do you prepare a continuously changing, worldwide system to be continuously robust in the face of change? Risks are constantly growing because of climate change and political unrest and more,” he says. “Supply chains are impacted all the time and the challenges are new all the time. That’s what makes SCM so exciting from a research perspective, because so many different things affect it.”
On March 25, MIT CTL will host the 10th annual Crossroads conference, which gathers global supply chain professionals and some of MIT’s leading faculty for what Sheffi calls “a showcase” of a broad range of research that bears on SCM. “This year, Crossroads brings news from the MIT laboratories to our attendees,” Sheffi explains, “allowing them to think about and discuss how developments from the lab will impact SCM.” The disciplines showcased at Crossroads 2014, Sheffi says, range from robotics to MOOCs [massive open online courses] to manufacturing and “big data.”
That breadth is deliberate. “We hear a lot from companies about the shortage of SCM talent,” Sheffi says, “and MOOCs can be one way to train more people. And in terms of manufacturing, as more of it moves back to the U.S., we need to rethink investments — where to put warehouses and rail systems.” As for big data, Sheffi notes that “supply chains create a tremendous amount of data, and new tools allow us to better analyze what people are buying, when they’re buying, etc., and then use all this data to make fast changes according to consumer behavior.” The conference is meant to give SCM professionals an improved understanding of the big picture.
One of the Crossroads speakers, Julie Shah, an assistant professor of aeronautics and astronautics who leads the Interactive Robotics Group at MIT’s Computer Science and Artificial Intelligence Laboratory, is researching “the choreography of robots,” the movements within factories and warehouses between humans and robots. “People must be able to move in and out of a space without the need to shut down a team of robots,” she says.
Shah is developing an algorithm to enable more agility in modifying the workflow of robots, which will accelerate the traditionally time-consuming process of retooling production lines: “Our algorithm is the first to handle scheduling problems like these in seconds,” instead of hours, she says.
Regarding robotics in general, Sheffi offers the example of the giant chemical producer BASF: “It now has a fully automated plant in Basel, Switzerland, guarded by one man and a dog.” With tongue firmly in cheek, Sheffi adds, “The man watches the machines, while the dog makes sure the man doesn’t touch anything.”
While technology is boosting efficiency, it’s not the toughest aspect of SCM, according to Sheffi: “The most challenging parts are policies, trade agreements, and all the things that people are involved in. That stuff is messy, unpredictable, and changing all the time. The world is not a stable place.”
Sheffi believes that when disruption strikes supply chains, structuring the decision-making process is crucial. “You have disruptions you can anticipate, so you have a playbook ready for those,” he says, “but then there are the black swans, unanticipated events like the earthquake/tsunami/nuclear disaster in Japan. Preparing for them is about preparing a set of processes.”
What processes? “Find out early what’s going on,” Sheffi explains. “Decide who will be inside the emergency operations center. You need engineers who understand procurement and people who are flexible thinkers. Who will be talking to the press? You better know who does what, and keep others away.”
Supply chains are increasingly seen as long-term drivers of competitive advantage in the corporate world, Sheffi says. “It’s so easy now to reverse-engineer a competitor’s product, as Samsung did with the iPhone in just months. But building a reliable global supply chain takes years. It’s a real, longer-term competitive advantage. That’s why Walmart’s CEO, Mike Duke, was the former head of logistics. Walmart sells the same stuff as everybody else, but their logistics makes the difference.”
