Why Every Manager Should Speak Supply Chain

An understanding of how supply chains work, even at a relatively basic level, has always been beneficial to managers in any discipline. However, in today’s complex world, such knowledge has become foundational to running a company.

The supply chain is where an enterprise interfaces with its markets. When disruptions occur—which is happening with increasing frequency in these uncertain times—the effects are immediately visible in the supply chain. The tragic collapse of the Francis Scott Key Bridge in Baltimore is the latest example of supply chain disruptions that have captured headlines this year. And we are only in the early stages of the second quarter. In addition, companies deal with a myriad of operational snafus every day that go largely unrecognized because supply chain managers mitigate them and they do not create general shortages. In many cases, the impact includes lengthening lead times and price increases for a time. However, large disruptions, like the Covid-19 pandemic or the earthquake/tsunami disaster in Japan in March 2011, do create shortages.

The ability to manage and recover from endless business interruptions is critical to competitiveness. Technology, notably AI-driven innovations, is refining this ability and promises to make companies more responsive to market conditions and able to recover faster from disruptions.

This was a key topic of discussion at the MIT Center for Transportation’s annual conference, Crossroads 2024, on March 26, 2024. Supply chains have become so complex that many of the established tools we use to manage them need improving. AI, in combination with human expertise, is addressing this challenge. For example, the dramatic growth in e-commerce requires more efficient, reliable delivery services. Companies need more advanced route planning tools that are better able to manage issues such as traffic congestion and unpredictable customer demands, as well as emissions reductions, in real time. These tools are now on the horizon thanks to algorithms that complement human know-how.

Finance or marketing managers do not need to have a deep technical knowledge of how tools like these work. However, an appreciation of what the tools can do in terms of the company’s ability to meet its customers’ needs and compete effectively will become increasingly important.

Similarly, manufacturing specialists may not be called upon to redesign supply chains in response to market shifts. Yet, tools are now available that allow them to contribute their unique expertise to redesign exercises. For example, MIT CTL’s Computational and Visual Education (CAVE) Lab simulates supply chains so that cross-functional teams can see the impact on cost and efficiency of changes, such as reconfiguring distribution networks.

The Covid-19 pandemic showed people outside of the profession that companies are only as good as their supply chains, and exposed non-professionals to the operational challenges that companies routinely grapple with. MIT CTL saw an increase in cross-functional sign-ups in our MIT MicroMasters Program in Supply Chain Management. We are also seeing more interest in bespoke courses for companies that teach supply chain management to managers from various disciplines. Interestingly, almost half (44%) of the attendees at Crossroads 2024 were not in the supply chain field.

Now, more than ever, managers of all stripes need to have a working knowledge of how supply chains function. This is necessary to ensure that their companies stay competitive in a volatile business environment and get the most out of a new generation of managerial tools.

This article was republished with permission.

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More supply chain resources from Dr. Sheffi.

The societal and economic spasms of the early 2020s highlighted the crucial role of world-spanning supply chains in the modern global economy, as well as the growing role of digital technology, including A.I. and automation, in the future economy. In The Magic Conveyor Belt, MIT Professor Yossi Sheffi explains what supply chains are, how they operate, and how the integration of advanced technology with people and processes will be the hallmark of future supply chain management.