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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
Feb. 19, 2021

In 2021, a Relook a MIT's Supply Chain 2020 Project from 2004

Rediscovering Dr. Larry Lapide's Search for Supply Chain Excellence

In 2004, MIT's Center for Transportation and Logistics launched a program call "Supply Chain 2020."

For some time it was run initially by MIT's Larry Lapide, whom I used to see regularly, especially during his tenure as a supply chain analyst at the then AMR (later acquired by Gartner), but it's been a long time. Lapide is still at MIT.

When I first heard of the program back then I thought this is great, MIT is going to do some research on what our supply chains would look like 16 years later.

Gilmore Says....

Excellent supply chains avoid the trap of trying to do everything well because then nothing is done well.

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I don't think we ever got that. Perhaps that wasn't really the purpose.

To add to my confusion, I saw some links last year to what I believe was a series of thought leadership pieces from MIT on supply chain 2020, but despite spending some decent amount of time web searching I simply can't find them. If someone can point me in the right direction I would be grateful.

Not long after the MIT program launched, I did find something useful for my efforts here at SCDigest. That is the graphic below from some Supply Chain 2020 document.

I often write or present on supply chain trends or the future of supply chain. I have often used the MIT Supply Chain 2020 graphic, because it makes the point that you cannot predict the supply chain of the future without assumptions about the world of the future, notably the areas of politics, the economy, and regulations.

Specifically, in about 2005 MIT laid out three potential 2020 scenarios relative to global supply chains.

Scenario 1 - Synchronicity: The world is at peace, trade flows openly and freely, there are lots of innovations, and other good things.

Scenario 2 - Spin City: Government interventions in markets is common, there is complex web of conflicting regulations, little international consensus on key issues, etc.

Scenario 3 - Alien Nation: Very local view of key issues, heavy protectionism, limited migration flows and more.

 

MIT's Supply Chain 2020 Global Scenarios

 

So where we in 2020? It wasn't Synchronicity, that's for sure. How about Spin City, trending towards Alienation? There were, I'll note, business headlines last year relative to "end of supply chain" - meaning long, complex global supply chains were losing favor, for a variety of reasons.

There is still an MIT Supply Chain 2020 web site. It includes a decent amount of content, though somewhat scattershot frankly. But I did find a 2006 piece written by Lapide interestingly titled The Essence of Excellence, based on MIT Supply Chain 2020 research. Let's take a look 15 later.

Early on, Lapide asks: "What exactly is an excellent supply chain?"

It's a question I have often asked myself.

Lapide notes how tough it is to answer that simple question. He says the MIT research on this started with a focus on supposed supply chain "best practices," - but soon found that was a dead end.

Lapide argued that "Realistically, there is no such thing as a "best" practice; best practices only work under certain business conditions in certain industries."

He notes, for example, that then supply chain icon Dell's direct-sell, build-to-order business model did not directly apply to other industries, such as the brick-and mortar retail world of another then icon, Walmart. It didn't even apply to other computer-related gear Dell sold.

Lapide came around instead to this: an excellent supply chain is essentially a "competitively principled" supply chain. What does that mean?

It has two core principles, Lapide wrote. First, the supply chain is strategically designed and operated according to an "excellent supply chain framework," that I will summarize in a moment. This, he says, will ensure alignment between supply chain business practices and the competitive strategy of the overall business.

I will note I have often said that in the end the best supply chains are those most aligned with the overall company business model.

The second core principle is this: excellent supply chain managers consistently operate on the idea that they need to be guided by the intent of the supply chain strategy. That means no "silo" mentalities, and such managers distinguish between those operations that have to be best-in-class when compared to competitors and others that just need to be "good enough."

"Putting it another way, excellent supply chains have an intended focus and purpose, and excellent supply chain managers understand, act on, and respect those intentions," Lapide wrote.

The most interesting thing to me about that statement is that it is predicated on the idea that most supply chains don't operate that way, else doing so would not be evidence of excellence, meaning better than others.

The above mentioned framework for supply chain alignment includes four elements, Lapide wrote, with excellence marked by a supply chain that:

1. Supports, enhances, and is an integral part of a company's competitive business strategy: In an excellent supply chain, the business strategy and its relevant elements need to be explicit and clearly understood by supply chain managers.

2. Leverages a supply chain operating model to sustain a competitive edge: At the same time, the supply chain operating model should not only support the business strategy but also be a major element in enhancing that strategy.

3. Executes well against a balanced set of competitive operational performance objectives: While a supply chain might execute well, that in and of itself does not make it excellent. Excellence is about doing well at what matters most - the things that matter to stay competitive.

4. Focuses on a limited number of "tailored" business practices that reinforce each other to support the operating model and best achieve the operational objectives: Excellent supply chains avoid the trap of trying to do everything well because then nothing is done well. To be excellent, a supply chain focuses its resources on the inputs that matter most and applies only adequate resources to those areas that are not as important to the strategy and operating model

All that makes sense. But ah, were it only so easy to just adopt such practices.

"It takes years to mesh the elements together - and a great deal of effort to alter them as the competitive landscape changes over time," Lapide wrote. Indeed, he wrote here in 2006 about getting going to have an excellent supply chain by 2020.

So two things. First, there a lot more in this article, and it seems quite current despite being written 15 years ago. Think I will do a part 2 soon.

Second, we now into 2021. We need new thinking about Supply Chain 2030 or something.

I will see what we can do.


Any reaction to these thoughts from MIT's Supply Chain 2020 research? Let us know your thoughts at the Feedback button (email) or section below.


Your Comments/Feedback.

 
 
 
 
 

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