Yossi Sheffi, Elisha Gray II Professor of Engineering Systems & Director of the MIT Center for Transportation and Logistics, discusses his new book, The New (Ab)Normal: Reshaping Business and Supply Chain Strategy Beyond Covid-19.
Some of the lessons and expertise gained from years of studying supply-chain risk could apply to the situation in which companies find themselves today, but other solutions must be crafted to meet the specific and extraordinary aspects of the current global pandemic. Sheffi sees the events of today as constituting an “inflection point” in business, comparable to the Depression of the 1930s and post-World War II changes in geopolitics and societies.
“Every disruption is different,” says Sheffi, “but managing a disruption has some of the same elements.” In nearly every crisis of similar proportions, companies set up emergency management centers through which they funnel all information and decision making. Worries about money lead to a reliance on cash. And the health and stability of suppliers become a subject of deep concern.
Notwithstanding the serious impact of the pandemic on supply and demand, Sheffi believes the general media has painted a picture that’s worse than reality. Store shelves might be empty at day’s end, creating dramatic photo opportunities, but they’re usually replenished by morning. “Journalists didn’t realize the cadence of how you supply supermarkets,” he says.
Nevertheless, supply chains today are encountering a greater need for flexibility, agility and speed than ever before. How that plays out in terms of network design is another matter. Sheffi doesn’t see a widescale abandonment of China as a source of low-cost production. Instead, he says, companies will lessen their risk by adopting a “China plus one” approach of limited diversification. “You don’t want to put all your eggs in one basket,” he stresses.
Timely, incisive articles delivered directly to your inbox.