In uncertain times, we can all use some guideposts to tell us how far we've come and how far we've yet to go. Here's our current take on the Ten Commandments for supply chain management success.
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
As we continue to work in a shape-shifting universe, we need some guideposts, some mileage markers that give us a sense of where we are and how far we have yet to go. This may be as good a time as any to put some success and failure factors on the table to help supply chain management professionals grow to become all they can be.
What follows is my current take on the Ten Commandments for success in supply chain management, in business, and in life. There are many, probably more than 10, but the core issues seemed to sort themselves well into a set of 10 Thou Shalts and Thou Shalt Nots. Please note that the items below are not carved in stone, either one- or two-sided, and that they are backed up on a flash drive.
1. Thou shalt not slander every idea that did not occur to you first. C'mon, man, are you really the smartest little boy (or girl) in the room, always? How many of your very fine ideas have been rejected because you abused, insulted, or demeaned all of those you would eventually need to get behind necessary change?
2. Thou shalt not dwell in the past. Get over it! Sears is terminally ill, and K-Mart is already dead. Omnichannel fulfillment is not the same as shipping orders from mailed-in forms at the turn of the 20th century. Visibility through information technology is not simply an updated version of walking the warehouse floor until the object of a customer's desire is spotted by the naked eye. And stop railing against the habits and passions of the current generation of working associates.
3. Thou shalt not live entirely in the future. Yes, I know that there is always a better way to do what we're doing. Yes, I know that what we have solved only portions of the greater challenge. I also know that it is somewhere between imbecilic and hopelessly naïve to throw out the investment in what we have before we have leveraged all that it can contribute—even if we can somehow roughly envision what might be better, if only we could define it and force the entire business community to adopt it overnight.
4. Thou shalt not focus on functions and outcomes. There is more to work life than meeting today's objectives in a world we suppose has been defined for all time as what it is now. While we are busy satisfying customers, we must also consider what's next. Not necessarily what is the ultimate unified field theory of everything supply chain, but what next year—and the year after—is likely to bring. And what we must do to be ready if the changes we can reasonably anticipate actually materialize.
5. Thou shalt not impose your style and preferences on everyone. Doing the right things in the right way requires teams of energized, motivated, and educated people. Leaders take many forms and pursue objectives in different ways—and are motivated by different factors. A tough lesson is that what drives you as a leader, how you work, how you communicate, how you reach goals may or may not yield the results you desperately need. You can't pep talk the organization's way to success; you can't intimidate that outcome, either. You can't take care of the people and expect results simply because they have been comforted; worst of all, no system of measures and milestones contains any guarantee that the real result will resemble the plan—in outcome, in timing, or in costs.
You, as a leader, must know what all the management styles are, when to use them, and with whom to use which ones. Further, you've got to know your people so well that you recognize where they fall in the task/relationship spectrum—and use the appropriate style with each of them.
6. Thou shalt carefully assess everything different. Not that we need to accept every notion that comes floating through the open window or hail each new concept as the panacea that will fix all that is wrong or overcome all the limitations and barriers of the past. But we do have a responsibility, for self-preservation if nothing else, to carefully consider those ideas that actually have merit, legs, and a promise of sustainability and scalability.
7. Thou shalt learn from the past. Despite the fate of dinosaurs stuck in the tar of La Brea, there are some universal truths that have validity from generation to generation, values that are, so far as we can see, eternal. Stick to these; adapt them as circumstances shift; and hold them, if currently in disfavor, close against the day when they are newly and more widely recognized for their intrinsic worth.
8. Thou shalt anticipate the future. None of us can afford to ignore the present; we must meet customer expectations and operational objectives. But we must devote time, energy, and resources to what happens—or is likely to happen—next, and after that, and then after that. As leaders, we cannot afford to be taken by surprise when the change that everyone but us knew was coming actually arrives.
We need to be actively thinking about such things as where our customers' markets are going, how we can help them stem the slide or capitalize on the rise, which of our suppliers are financially vulnerable or not scalable to our next level, what supplies and materials are being exhausted on a global basis, what new products and lines are looming in our industry, how order profiles are likely to shift, and on and on.
9. Thou shalt operate under the umbrella and context of the organization. Functional understanding is a given. But the planning and execution of supply chain management (SCM) must be strategically and organizationally relevant. That translates to the entire supply chain's getting the picture—understanding that SCM is not so much about squeezing costs out of suppliers, trimming labor, or cutting inventories as about building enterprise financial performance. That is what makes SCM truly a competitive differentiator, an investment in growth and profitability, and not simply cost to be managed by beady-eyed CPAs.
10. Thou shalt require accountabilities, outcomes, objectives, and plans from all. For all the talk about styles and preferences, and no matter which is used when and with whom, all plans and assignments must conclude with clear mutual understanding of what will be done, when, at what cost, with which milestones, and with what quantified benefits. No matter the appropriate style, no matter the motivations, acceptance of the assignment with its terms and conditions is the only thing that counts—even when the assignment is a creative exercise to find the lost, to imagine the unthinkable, to solve the intractable, or to invent the unknown.
BONUS ROUND
Here are two additional commandments—no extra charge. Feel free to abide by their guidance. There are more; you may add your own to the list as well.
11. Thou shalt not live in the present. Failing to look either through the windshield or in the rear-view mirror is a shortcut to madness. Fixing today does not necessarily fix tomorrow; ignoring yesterday can obscure the solution needed today.
12. Thou shalt live in the present. Don't forget, with all the looking ahead and looking back over one's shoulder, that the customer needs the order shipped today, that a status inquiry deserves an answer today, and that an HR issue that is a flesh-eating cancer must be addressed now.
WAIT! ISN'T THIS ONE GIANT CONTRADICTION?
Well, yeah. Welcome to the real world. See, here's the deal. Success is not about finding the golden ticket that gives magical entry to Willy Wonka's factory. It is about finding the balance among the competing, yes, contradictory, forces in our work and personal lives. About being analytical enough to sort through the opposing elements, and about being street-smart enough to make good choices—and tough enough to stick with them.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
Global trade will see a moderate rebound in 2025, likely growing by 3.6% in volume terms, helped by companies restocking and households renewing purchases of durable goods while reducing spending on services, according to a forecast from trade credit insurer Allianz Trade.
The end of the year for 2024 will also likely be supported by companies rushing to ship goods in anticipation of the higher tariffs likely to be imposed by the coming Trump administration, and other potential disruptions in the coming quarters, the report said.
However, that tailwind for global trade will likely shift to a headwind once the effects of a renewed but contained trade war are felt from the second half of 2025 and in full in 2026. As a result, Allianz Trade has throttled back its predictions, saying that global trade in volume will grow by 2.8% in 2025 (reduced by 0.2 percentage points vs. its previous forecast) and 2.3% in 2026 (reduced by 0.5 percentage points).
The same logic applies to Allianz Trade’s forecast for export prices in U.S. dollars, which the firm has now revised downward to predict growth reaching 2.3% in 2025 (reduced by 1.7 percentage points) and 4.1% in 2026 (reduced by 0.8 percentage points).
In the meantime, the rush to frontload imports into the U.S. is giving freight carriers an early Christmas present. According to Allianz Trade, data released last week showed Chinese exports rising by a robust 6.7% y/y in November. And imports of some consumer goods that have been threatened with a likely 25% tariff under the new Trump administration have outperformed even more, growing by nearly 20% y/y on average between July and September.