Current Supply Misconceptions By Matt Foust, DCMME Center Graduate Student Assistant

Current Supply Misconceptions

As a profession, those that work in supply chain are constantly on the lookout for initiatives that can make companies more efficient, cut cost, or incorporate new technology (usually to become more efficient or cut cost).  But not all of the newest hype is always worth an investment.  And some of the newest trends or prevailing knowledge don’t always save time and dollars.  In the article The Biggest Supply Chain Fallacies, we will look at some of the current misconceptions and over-hyped technology that currently are in the supply chain industry.

Regarding newer technologies, Blockchain is very popular just about everywhere.  Through its rise in cryptocurrency, many companies have taken notice and exploring where Blockchain might add value.  I’ve even wrote in recent blogs about Samsung is planning to implement Blockchain in its logistics.  But Blockchain isn’t without its issues, and the author of the article brings ups a very good point – Blockchain cannot overcome the issue of garbage in – garbage out.  Suppose an upstream supplier lies about what they are doing and enters the untrue information in the Blockchain.  This information will be regarded as true and is unable to be changed later on.  The need for certify and monitor suppliers is not solved by Blockchain, and since Blockchain’s records are unchangeable, the need to certify may actually be more important.

The next fallacy is that Corporate Social Responsibly (CSR) initiatives will assuredly drive better financial performance.  Unfortunately, this is just not true. CSR programs can reduce cost such as initiatives to reduce fuel consumption through better routing and more full truckloads, but CSR programs overall tend to be better looking from the outside.  A realistic view of CSR programs is that may reduce cost, they will most likely attract better talent, and they will attract positive attention to the firm.  Overall, CSR matters more in wealthy nations and to younger employees, and its important to be realistic about what can be achieved through their usage.

Finally, the last supply chain fallacy discussed is the apparent truck driver shortage.  This shortage, as claimed by the majority, is due to the fact that younger people do not want these jobs. But the basis of this issue is most likely just economics.  The average wage for the truck driver according to Salary.com is a bit over $42,000/year.  At that wage, most young people do not want that job.  If wages went up, economically it would make sense that there would be more individuals that would want to drive trucks.  And in fact, that is apparently happening.  From 2013 – 2017, truck driver salaries increased between 15%-18%.  As wages increase, there will eventually be more drivers, and this shortage will be solved.  Interestingly, the author of the article brings up automation taking the place of drivers as wages rise.  Autonomous vehicles are a hot topic right now, but it’s highly unlikely that autonomous trucking fleets make their way on to our roads anytime soon.

As supply chain professionals, its important that we discern fact from fiction and over-hyped technology from value-adding technology.  Getting differing opinions, staying well read, and keeping an open mind appear to be the best ways to move forward, even in an ever-changing environment.

 

 

Do you believe these points to be true?

Are there other supply chain misconceptions not mentioned?

Where will blockchain’s utility be found or is it most likely not useful in a supply chain context?

 

https://www.forbes.com/sites/stevebanker/2018/04/09/the-biggest-supply-chain-fallacies/2/#1e782f7a2b05

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