Quick Take: Ending the supply chain crisis
Can manufacturers, distributors, and reps come together to create a new version of the supply chain for the digital age?
A marketplace of ideas for the future of B2B
I am happy to co-found the B2Best Roundtable Show with Keith Williams, CEO and Founder of Factrees, the first networking platform for the B2B value chain. We explored the supply chain crisis with experienced B2B leaders in our first live event, Navigating the Supply Chain, on March 25, 2022. Our group offered perspectives on manufacturing, distribution, rep agencies, and buying group points of view. The conversation was wide-ranging, robust, forward-looking, and essential. The supply chain crisis is continuing, and current fixes are stopgap. Creating solutions and consensus will only arise through open dialogue, respect for ideas, and a drive to explore, challenge, and mend the fundamental principles for doing business in the digital age.
Our B2Best Roundtable dialogue is an excellent beginning. In this edition, I suggest two themes for going further by pairing related dynamics and competing interests. Each theme is the beginning of a use case for which policy, organizational, and technology solutions might be devised. My goal is to promote a marketplace of ideas before settling on best practices. With each theme, I offer futuristic ideas to stretch our discussions.
Inventory and workers: One cannot exist without the other
Our panel noted that, in the past, “MBA principles” led to an obsessive pursuit of supply chain efficiency through just-in-time practices. But as the business community drove inventory levels down, our society devalued the pursuit of skilled trades as a rewarding profession. Inventory shortages are not only due to locked down manufacturing facilities but also the absence of humans to move products—dockyard workers to load and unload ships, truckers to deliver inventory on one end and drive it away on the other, and warehouse workers to pick, pack, and ship to customers.
If continuous improvement blinded us to supply chain fragility, our educational institutions and wage-setting mechanisms dissolved the labor resources that create economic sturdiness. Inventory and workers are intertwined resources; the best solutions will fix both. I offer two ideas:
Upgrade every skilled worker's job description and work processes to include creating value through smart labor that enables the collection and use of data. If smart products, buildings, highways, and cities run on data, the worker that delivers, builds, maintains, and fixes our infrastructure must also be digitally transformed while retaining and leveraging their human skills.
Establish a unified standard for tracking inventory from beginning to end in the supply chain, and empower workers to contribute data about inventory condition, added value, and customer experiences. Just as HTTPS standards created the internet by tracking and managing data packets, so would an inventory standard help manage products in containers, on pallets, and in boxes all the way through to customer workstations. (For more, read here.)
Transparency and protectionism: Radical metrics for fundamental change
Transparency cannot exist without collaboration. End customers want to know the location of their orders as they move through the supply chain. Visibility helps customers manage risk, but it alone doesn’t deliver results. Building a new supply chain version that creates wealth beyond what was previously possible requires collaboration across businesses that are at the same time suppliers and distributors, partners and competitors, fierce friends and mortal enemies.
The supply chain operates in a stasis of hedged collaboration. Every player shares just enough data to get what they want, monetize their activities, and protect their profits. Business processes drive productivity, but they are primarily internal. Established business practices are an impregnable barrier to change, but what gets measured gets managed; a few targeted initiatives with widely reported radical metrics might begin to breakdown the battlements:
Buying groups and trade associations are uniquely positioned to help members manage select inventory as a shared or pooled asset. The goal is to promote horizontal trade. Situations that might provide an economic justification include filling missing elements for a bundled delivery, specialized storage or handling requirements, alternative brands for like-for-like substitutions, and so on. (Read here for more on horizontal trade.)
Data platforms and people exchanges, run by independent or co-owned enterprises, may promote new practices and break down barriers. Profits are the most potent and essential motivator. As distributors aggregate inventory to provide a saleable market basket of solutions, data aggregators might be incubated to offer wealth-creating services. On the human side, buying groups and industry associations might create full-time innovator-in-residence positions to allow industry leaders to step away from their employers to work for the common good, creating profits for all.
Your take?
Last week, I attended Peter Zeihan’s brilliant keynote at NAED’s Annual Meeting. Zeihan is a geopolitical strategist, and author of the soon-to-be-released book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization. After reviewing global issues, including the war in Ukraine and the deepening struggle with authoritarian practices, Zeihan touched on the future of the worldwide supply chain.
Zeihan’s message is a wake-up call for business leaders. We must not let the future of the supply chain default to slightly improved past practices or let it be designed by others that do not understand or support a free, open, productive, and innovative way of doing business. What are your ideas? What can you do? How can I help? Please share your comments below or reach me at mark.dancer@n4bi.com.