Taking a Systems Approach to Global Supply Chains with Dr. Chris Caplice and Dr. Bruce Cameron
In the past 18 months, most of us have experienced what happens when supply chains falter.
In a recent webinar, Dr. Chris Caplice, Executive Director of the MIT Center for Transportation & Logistics and Dr. Bruce Cameron, Director of MIT's System Architecture Lab, discussed how the pandemic called attention to the interconnectedness of supply chains and the value of a systems thinking approach for professionals working in supply chain design and management.
The two MIT instructors explored how a single disruption in today’s multi-tiered, global supply chains can set off a “domino effect” felt across the system. The more steps removed you are from the disruption, the less visibility you have to anticipate and solve problems. This is similar to ripple effects seen in engineering, where one change can impact many parts of a design.
“We expect to see even more convergence between systems engineering and supply chains,” says Dr. Bruce G. Cameron, Director of MIT's System Architecture Lab and lead faculty instructor for the MIT xPRO online certificate program in Systems Engineering, “Amazon Robotics, Intralox, and others in the warehouse automation space are building complex systems that will require systems engineering capability. Companies that develop systems understanding within their supply chain management team will have an advantage.”
“We expect to see even more convergence between systems engineering and supply chains. Amazon Robotics, Intralox, and others in the warehouse automation space are building complex systems that will require systems engineering capability. Companies that develop systems understanding within their supply chain management team will have an advantage.”
-- Dr. Bruce Cameron, Director of MIT's System Architecture Lab and lead faculty instructor for the MIT xPRO online certificate program in Systems Engineering,
During 2021, we saw many major disruptions to supply chains in every industry. Dr. Caplice shared several impactful real world examples, from how the drastic shifts in beverage consumption demanded increased transportation capacity, to the broad-reaching effects of the 2021 Texas freeze, which caused major chemical plant and refinery shutdowns. With these interconnected disruptions expected to continue, a systems approach for professionals in supply chain management is more crucial than ever.
When working with these complex systems, managers need to make decisions on a multitude of variables and related constraints, such as choosing transportation carriers, timing for moving and delivering goods, where and when to hold product in stock, and which channel partners perform which functions.
Supply Chain Management Meets Systems Engineering
Supply chain and operations managers can gain an advantage by taking a systems view often used in architecture and systems engineering. Dr. Caplice and Dr. Cameron had three pieces of advice for supply chain professionals looking to do so:
- Help your teams develop capability in systems thinking and management so you can gain the advantage of designing, managing, and operating your supply chain as a complex system.
- Strengthen relationships out across your supply chains to encourage more transparent communication -- for greater visibility and more realistic planning.
- Experiment with emerging technology and mathematical models to help increase visibility, modeling, and more real-time access to data.
Those of us familiar with either supply chain management or system engineering may wonder how the two disciplines are similar. Recognizing their common challenges could help professionals re-think their approach in either discipline.
In their webinar, Dr. Caplice and Dr. Cameron outlined three common challenges across systems engineering and supply chain operations:
|
Common Challenges |
Supply Chain Operations |
Systems Engineering |
|
Pain from SKU proliferation |
It’s a challenge to forecast low-running stock-keeping unit demand in the supply chain |
It’s difficult to “integrate,” more SKUs increase integration risk |
|
Making tradeoffs |
Changing replenishment policies increases available product but also increases inventory costs |
Balance tradeoff between performance attributes and cost. |
|
Limited visibility and uncertainty require planning |
Factors such as delivery performance, weather events, and demand can shift suddenly, making them difficult to predict |
Limited visibility into customer needs, plus performance uncertainty |
Whether in systems engineering or supply chain management, structured approaches can help manage uncertainty and reduce risk.
“Applying a systems thinking frame helps you consider variables and constraints in a more holistic way. Rather than ping-ponging between alternatives, you can have high-quality conversations that consider downstream consequences and what can and can’t be modeled. This leads to better decisions and more effective management across your supply chains.”
--Dr. Chris Caplice, Executive Director of the MIT Center for Transportation & Logistics and Director of the MITx MicroMasters® Program in Supply Chain Management.