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2013

Supply chain is not sexy. If possible, infrastructure is even less sexy. Supply chain sometimes makes the news now. Whenever it does, my mom clips the headline and article out of our local Montana newspaper and sends it to me with a big hand drawn smiley face. Infrastructure rarely makes the headlines and it definitely doesn't warrant the same attention from my mom. But, infrastructure matters.

 

Supply chain is gaining attention within the business community and more people today, than ever before, would acknowledge that a company's success or failure depends on the performance of the supply chain. Even more exciting is the fact that the most advanced companies have moved from an operations understanding of supply chain to a strategic understanding of supply chain. But, what makes a good supply chain? Well, there's a lot of things but one of them is reliable infrastructure that enables people and products and services to move around the world by rail or air or ship or bus or digital paths.

 

Infrastructure often doesn't get its time in the headlines, but when it does, it's rarely good news. The destruction caused by Typhoon Haiyan in the Philippines and other surrounding countries has once again illuminated the role that infrastructure plays in a supply chain. In this case, it is a humanitarian supply chain attempting to get supplies including food, clean water and medical supplies to some of the hardest hit areas. Devastatingly, infrastructure including passable roads to some of the hardest hit areas no longer exists.

 

But this is not only a problem outside of U.S. borders. The 2013 Report Card for America's Infrastructure from the American Society of Civil Engineers grades the U.S. infrastructure with a D+. No matter how long you've been out of school, we can all recognize that a D+ is just plain terrible.

 

I would encourage you to learn more about the problem at the above links. Of course, education won't solve the problem of deteriorating bridges, airports or roads, but it is a step in the right direction. This problem matters to everyone, but should be especially concerning to those of us whose job it is to make supply chains work. We now recognize that a company can't succeed without a supply chain, but we should also realize that a supply chain can't succeed without sound infrastructure.

 

In the wake of Typhoon Haiyan, I am reminded even more that infrastructure may not be sexy, but it is fundamental to the functioning of a society. Sometimes the supply chain may be moving the newest goods to the store for Black Friday sales and sometimes the supply chain is moving drinking water to devastated parts of the world after horrible disasters like Typhoon Haiyan.

 

Finally, I've always been both interested and inspired by those working in humanitarian logistics roles and this has been a good reminder to me that the limitations are so diverse. It's not just about having enough money or having the right people there to help. Without the basic roads to get into places, it's an unbelievable challenge and I am so inspired by the ongoing relief efforts. Wherever you are in the world, infrastructure matters.

I spent some time this weekend typing up my notes from the CSCMP event in Denver. An off-hand comment from a panel discussion regarding TMS systems that resonated with me in Denver again struck a chord as I worked through my notes.

 

The idea was that outsourcing, in this case, in regard to managing and running TMS, is neither universally good or bad. Oh yay, the land of grey. In fact, leaders and laggards outsource for very different reasons according to the panelists. Here is what I took away from the conversation.

 

Leaders within an industry outsource because they require additional people and or time that they do not have in-house. They need help getting stuff done in a very operational sense. Laggards, on the other hand, outsource for a very different reason. They outsource for expertise that they do not currently possess. It's not simply about getting additional help to accomplish the task; instead, laggards are likely outsourcing for the leadership or just a level of proficiency that does not exist within the organization.

 

So, how does a laggard become a leader? They begin to develop expertise in house. Easier said than done.

 

As I think more about it, this is not some ground breaking revelation, but for me, it's a chance to connect the many shades of gray that drive outsourcing decisions with the many shades of gray that are then reflected in a company's financial performance.

 

As I start work this week on another report, I've been thinking about all of the ways a single metric (cash-to-cash cycle, for example) can disguise what is really going on within the company. By drilling down one level deeper, whether it be into the components of the cash-to-cash cycle or to the reasons behind the decision to outsource, you can get a much clearer picture of the company and the status quo driving that financial performance or outsourcing decision.

 

Be on the lookout for that new report next week and don't be afraid of the gray. It's only by digging a bit deeper that we can move beyond that gray into something resembling clarity.