Building a resilient and sustainable global supply chain: Prof Ed Sweeney, Aston Logistics & Systems Institute
During a WIG webinar on building a resilient and sustainable global supply chain, our attendees posed a huge number of insightful quesions to Ed Sweeney, Professor of Logistics and Systems and Director of the Aston Logistics & Systems Institute at Aston University.
Here Ed has kindly taken the time to offer his responses to questions we didn't have an opportunity to discuss on the day; from the challenges of COVID-19 recovery, to building in 'circularity' and the impact of disruptive technologies.
What can government do to help our manufacturing supply chains become more resilient?
There are two key things, both of which aim to improve supply chain innovation. First, there is a well documented shortage of critical skills at all levels. The Government should fund a new national centre of excellence that brings together FE, HE, business and industry, and professional bodies. It would make sense to locate this in the Midlands, at the heart of the UK supply chain. Second, the Government should support supply chain innovation by providing funding aimed at effectively transferring knowledge from laboratory settings (and there is much really good stuff) to the shop floor.
What major risks threaten supply chains in the future; three months and beyond
The first is post-Covid rebuilding. Many supply chains are extremely fragile as a result of the lockdown-induced economic downturn. They will need to build back up again quickly with a particular emphasis on how SMEs – the backbone of most supply chains – can recover. The second is Brexit. A no-deal scenario again looms with potentially disastrous consequences for UK businesses and supply chains. The third is the existential threat of the climate emergency. We know that supply chain processes contribute significantly to greenhouse gas emissions and need to find more environmentally sustainable ways of doing things. There are many other challenges, some of which I referred to in my briefing. To my mind, the most serious is the talent crisis – the serious shortage of critical skills and knowledge throughout the supply chain world.
To what extent do you think supply chains will and should become shorter and more local? In terms of political and environmental considerations.
Some supply chains are now “near-sourcing” and “re-shoring” which makes them shorter and more local. This is inevitable in the context of the pandemic crisis and various geopolitical pressures. However, globalisation is not going away and my sense is that many supply chains will continue to have strong international complexions and that many will remain genuinely global in nature. It is likely that there will be significant variations across sectors.
How are you tackling the security issues around your information flows that the chain relies on?
Our empirical research suggests that cybersecurity is a major and growing concern. The first response is about awareness – educators such as ourselves and professional bodies have been active in this area. The second key response is about working more collaboratively with ICT vendors, particularly in relation to designing and implementing secure ICT infrastructure. The third key piece is around education and training, i.e. ensuring that staff at all levels are equipped with the right knowledge and skills to deal with this threat.
What examples are there of companies and government policies that have simultaneously driven resiliency and environmental sustainability in their supply chains?
Many leading edge companies have been working on this resilience/sustainability conundrum over a long period of time (some of those in the Gartner “Supply Chain Top 25” – see https://www.gartner.com/en/supply-chain/research/supply-chain-top-25 - are highly accomplished in this area for example). I see little in Government policy that reflects or supports this. The pandemic has illustrated beyond doubt that public policy-making needs to be much better informed from a logistics and supply chain perspective. Perhaps we need a Government Chief Supply Chain Officer?
What do you consider to be the biggest barriers to more environmentally sustainable / circular supply chains?
Risk aversion and complacency is the biggest in my view – the sense that “well, we’ve always done it this way and we don’t really want to change”. Most firms now know that business-as-usual is not an option so that risk (and change) aversion is likely to dissipate. The other barrier is a concern about the cost of the shift towards more sustainable supply chain models – there needs to be much more done around how to balance short-term financial/shareholder value imperatives with longer-term environmental and social priorities.
Could Blockchain/Distributed Ledger Technologies be adopted in a significant way to improve supply chain management?
Yes but only as part of a wider “systems approach” to effective technology adoption in my view. My concern is that blockchain becomes seen as the latest in a long line magic solutions or silver bullets or panaceas with all of the associated hype. It absolutely has a role to play, particularly in terms of facilitating the more collaborative approaches which are needed now more than ever.
Have you seen Just In Time supply chains looking to adopt more Just In Case models as a result of what you've described as a "new normal"?
Yes. But again this will vary hugely from sector to sector. “Just-in-case” was often used in a quite pejorative sense in the past; in future the supply chains of critical products (e.g. in medical and healthcare settings) will need to focus much more on strategic stockholding rather than on the never-ending quest to eliminate waste in line with the JIT mantra. In short, one size does not fit all and future supply chains need to fit for purpose given the specific and often unique challenges faced by particular sectors.
Which countries across the world have demonstrated through the way they have coped with the COVID crisis that the UK may have something to learn from their SCM practices?
Many of the countries that have coped relatively well with the Covid crisis do seem to have mature and robust supply chain architectures. My earlier point in relation to “one-size-fits-all” may be relevant here. The other key lesson relates to decision making time horizons. There appears to be some evidence that firms, sectors and countries that have better developed long-term strategic decision making processes have fared better than those with a shorter-term perspective. More research is needed to really understand the issues raised by this excellent question!
Do you imagine that the disintegration of vertical supply chains and changes to just-in-time' supply chains may have knock-on impacts through decreased innovation in products and services (e.g. through a shift to more generic products/interfaces)?
Possibly but there are some competing forces at work here. One of the initial responses to the demand spike for food in March was a reduction in choice through SKU rationalisation. The use of more generic assemblies/components does offer many potential advantages too. I think that the big factor will be the extent to which firms can better integrate their design and supply chain processes. The 3D concurrent engineering (3DCE) concept has been around for a long time but there is no evidence of significant uptake. Higher levels of process integration in this context opens up the possibility of reduced cycle times and costs.
Should Gov be doing more to promote sustainability considerations in companies' supply chains? Gov has traditionally been cautious of intervening
Definitely and this is recognised in the Industry Strategy (and “Grand Challenges” – see https://www.gov.uk/government/topical-events/the-uks-industrial-strategy). Government has been cautious about intervention in business for various reasons but positive initiatives that support the development of an overall ecosystem that promotes high-value and sustainable UK-centric supply chains must be welcomed.
`Resilience` has become a buzzword across government in relation to supply chains during COVID. Yet, during business as usual, optimising efficiency is essential to give firms a competitive advantage, whilst optimising for resilience usually entails additional costs and reduced profit margins. Do you think that as we recover from COVID and the shock begins to fade from people's memories, we will begin to optimise for efficiency rather than resilience?
I believe that we will have a window of opportunity – possibly quite a short one – during which we can build back with a real focus on resilience and sustainability. There is a strong danger that business-as-usual will prevail if we don’t take advantage of this window. There is an unprecedented opportunity arising as a result of an unprecedented crisis and it is incumbent on us to grasp it.
WIG members can watch Ed's presentation, read our report on the webinar, and watch other webinar recordings in our resource library.
Prof. Ed Sweeney
Professor of Logistics and Systems, Director of Aston Logistics & Systems InstituteAston University
Edward Sweeney is Professor of Logistics and Systems at Aston University where he is Director of the Aston Logistics & Systems Institute. He was previously Director of the National Institute for Transport and Logistics (NITL) in Ireland. Ed has held other full-time academic posts in the UK and Malaysia, as well as visiting positions in several Asian universities and institutes. Edward worked and lectured in over 50 countries in Europe, North America and Asia. His research has been widely disseminated and he sits on the editorial boards of several leading international academic journals. The focus of Ed’s current work is on sustainable and resilient supply chains.