Mary Holcomb, associate professor at the University of Tennessee, reveals some key conclusions of the school's annual study on trends in transportation and logistics, conducted in tandem with Georgia Southern University.
Just what constitutes a sustainable supply chain? The 18th edition of an annual study on trends and issues in transportation and logistics, conducted by the University of Tennessee and Georgia Southern University, aims for a broader definition of that term than is commonly used.
Holcomb doesn't just view sustainability in its trendy sense of environmental responsibility. To her, the word encompasses a wide range of supply chain management practices that enable a company to thrive in all economic climates. And that doesn't mean focusing exclusively on cost reduction when times are bad. Firms adopting such an approach "are making decisions that will not position them well to move forward." By failing to make meaningful investments in technology, infrastructure and process improvement, Holcomb says, companies jeopardize their ability to compete in the long run.
Many businesses had become so accustomed to realizing double-digit cost savings that they suffered "a sudden shock" when the economy took a dive, she says. The ripple effect of the crisis reached multiple tiers of the supplier base.
Cost control is important, but it's not the only cornerstone of an effective supply chain strategy. Holcomb identifies five drivers of real sustainability: optimization, synchronization, profitability, adaptability and velocity.
The authors of the annual study intend to conduct additional research, to determine which of those drivers merits top priority in a long-term strategy. "We do not know absolutely which driver will be first," says Holcomb, while offering the personal view that companies "are always going to be interested" in profitability. But others might choose optimization as a starting point.
The researchers are releasing a series of reports, each focusing on one of the five chief drivers. Reports on optimization and synchronization are already available on the website of the University of Tennessee. Profitability was scheduled for release in November, 2009; adaptability for January, 2010 and velocity for February. The goal, says Holcomb, is to present "the specific aspects measuring where we are currently, what the gap is and what the ideal is."
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