Most supply chain professionals don't need a panel of experts to point out the importance of infrastructure to smooth-running supply operations. They've seen the evidence firsthand in the protracted freight backups caused by congestion at West Coast ports in 2004 or freight stranded by road flooding after Hurricane Katrina.
What they might not always consider is just how wide-ranging that critical supply chain infrastructure really is. There's more to it than just roads and bridges. There's the telecommunications network, for instance, and the electric power grid. Not to mention the people who take charge of the operations. What follows is a rundown of some of those elements—what we like to call the hardware, the software and the middleware.
The "hardware" side
To most people,the term"infrastructure" means the physical transportation infrastructure—the roads, rail track, airports, subways and so forth that serve as channels for both people and freight. But as we see it, the "hardware" also includes some elements that aren't quite so obvious. Let's take a closer look at some of the components:
- Roads. That's obvious, right? But consider the variety of roadways that fall into this category. They include:
- Motorways: Typically called interstate highways in the United States, these are the limited-access, sometimes toll (but usually toll-free), multi-lane, long-distance—often transcontinental—routes that connect major population centers.
- Other primary highways: The free-access, generally four-lane and often long-distance (even transcontinental) routes between—and sometimes through—major and intermediate population centers.
- Secondary and tertiary roads: The free-access, usually two-lane, paved and maintained routes connecting cities and towns of all sizes. (Few, if any, supply chain operations in the United States and Canada make use of the gravel or dirt roads found in remote rural areas.)
- Other streets and roadways: The network of city streets, highway access roads, beltways, spurs and other ancillary components of the total surface transport system.
- Bridges: Bridges may span water, other roadways or rail track. (Regardless of type, they're all said to be in desperate need of upgrade and repair in the United States.)
- Railroads. The network of tracks crisscrossing the United States. (For purposes of this discussion, we consider light rail, commuter, and passenger rail to be components of another infrastructure.)
- Inland waterways. Though we tend to dismiss them as a relic of the 19th century, barges continue to ply the nation's inland waterways, hauling iron ore to steel-making centers and logs to paper mills. Water transport (over rivers, canals and lakes) also remains important in Europe and other parts of the world.
- Ports. The nation's port infrastructure includes both seaports (along with their docks, cranes, distribution facilities, rail trackage and access roads) and airports (and their associated storage, distribution and processing facilities).
- Land. Though often overlooked in discussions of transportation infrastructure, land—specifically its availability and cost—holds heavy sway in supply chain decisionmaking. Many times, real estate considerations end up dictating facility footprint size, degree of mechanization and even supply chain network design.
We should also note that the ability to leverage the physical infrastructure to the fullest assumes that we have adequate fleets: trucks of all varieties and sizes, planes, boats and barges, and railcars and power units.
The "software" side of infrastructure
The physical structures represent just one part of the supply chain infrastructure. There's also what we like to call "software"—the intellectual infrastructure. This, too, has a number of components. They include the following:
- Workforce. The supply of skilled workers; that is, people who are educated in the basics of computation and communication, who are flexible and trainable, and who demonstrate both a strong work ethic and a desire to succeed.
- Practitioners. A pool of seasoned managers—people who have acquired the hands-on knowledge and practical experience needed to guide and direct the efforts of others.
- Support resources. These include—dare we say it?—consultants, who can help spread the word about best practices and offer experienced counsel on ways to solve specific problems.
- Technology support staff. The software designers and developers and the material handling system designers who conceive and generate information and handling solutions, and can advise customers and clients in their application and implementation.
- Education and research facilities. Not just colleges and universities that can turn out competent graduates, but also institutions that conduct research in the logistics and supply chain management field. And by that, we don't mean a lone faculty member synthesizing the results of other people's studies; we refer to advanced research institutions dedicated to promoting leading- edge theory and practice.
- Government. As sensitive a topic as this might be, there's no question that national and local governments can either promote or hamper a supply chain's operation. A local government that's willing to build roads or shore up bridges, for example, can provide invaluable assistance to any supply chain enterprise.
Linking it all together
Beyond all that, there is a category we might call "middleware," if that's not stretching the hardware/software analogy too far.Without these elements to tie everything together, the supply chain would collapse. These elements include:
- Communications and connectivity. The land lines, fiber-optic cables, and satellite and mobile communications networks we rely on to transmit the data that are so essential to day-to-day commerce. If these aren't infrastructure elements, we don't know what else to call them.
- The electric power grid. We learned a few things about the connection between electricity and the smooth functioning of supply chains—not to mention, society— the hard way a couple of years ago when the Northeastern United States and large chunks of Canada went dark unexpectedly. Just imagine, there are parts of the world that experience this on a regular basis.
For instance, think about Cuba, in which a 100-year-old power plant can't provide enough power to keep the lights on for more than an hour without failing. Consider Istanbul, a 21st century city in which periodic power outages add to the quaint charm of the Eurasian experience. Imagine trying to meet 24/7 operating requirements in a country that shuts off the power at 10 every night. - Standards. You might not have thought of standards as an element of infrastructure, but consider the chaos if suppliers, wholesalers, carriers and customers used incompatible bar codes or RFID tags. Or if trade partners attempted to exchange data electronically without the benefit of agreed-upon EDI message standards.
For companies rushing headlong into the global marketplace, standards are something they can no longer ignore. Each time a prospective trading partner presents itself, they have to determine whether it adheres to the same standards they do and if not, how to fix the problem. The people who work daily with these issues—and work them out—are unsung heroes of modern commerce and supply chain management.
So, in the world of supply chain management, "infrastructure" isn't merely a term to throw into the conversation in order to appear erudite. It's important. It's complex. And it has enormous implications for how— and how well—supply chains work.
