Modernizing supply chains critical to operational efficiency, experts say

Supply chain efficiency is becoming the key operational differentiator for companies competing in a worldwide market place that increasingly is ignoring traditional borders and limitations.

Every dollar and every minute small businesses spend on the supply chain helps make every link in that supply chain more durable.

That was the message from U.S. Chamber of Commerce President and CEO Thomas J. Donohue at a recent confab of supply chain experts in Washington on May 27.

“It is time to build tomorrow’s networks today, Donohue told more than 100 officials. “Everything we’re doing in technology, business and trade is all about the supply chain,” Donohue said.

“The supply chain is a major artery of our economy,” Donohue said. “Most of the products we use daily from cars to phones are made from components of multiple countries.”

Donohue said people often take a too narrow view of supply chains. Instead of just the movement of goods, it also means far more. “Supply chain is also the movement of money, finance and people,” he added.

Toward that end, Donohue urged the Trump administration to “Do No Harm” to the 24-year-old North American Free Trade Agreement. “Amend it,” Donohue said, before adding, “Don’t end it.

Donohue and others spoke at the U.S. Chamber’s fifth annual Global Supply Chain Summit on May 17.

Juan Perez, chief information and engineering officer at UPS, said information security is vital to supply chains everywhere. “Supply chains are so reliant on technology,” he said. “Information security is top of mind in everything we do.”

Technology will continue to drive changes in the supply chain, Perez said. He said all companies, including UPS, are essentially technology companies sometimes disguised in other elements of industry.

“Never in the history of commerce have we had more powerful machines at our disposal,” Perez said.

Toward that end, Perez disclosed that UPS expects to be using driverless trucks within the next five years. And he said he expects autonomous vehicles to be “standard operating procedure” with 10 to 15 years. And it’s possible drones could be used for deliveries in remote locations, Perez said.

“It’s going to make us better—and faster,” he said.

But increased security requirements in the post-9/11 environment can impede those supply chain improvements. But a top government transportation security official said the goal is to add technology to help move goods and people more safely through the system.

Rod Allison, acting deputy administrator for the Transportation Security Administration, said TSA “can’t do this alone” and called on transport companies   to cooperate in a collaborative manner to keep the nation’s transport space secure.

“It’s a team sport,” Allison said. Toward that end, TSA is pushing to a system that is “more transparent and more coordinated” that currently employed.  “We are mindful that any disruption can have a worldwide impact,” Allison said.

He said TSA is committed to engaging more with industry to keep the agency in coordination with industry. “In the past the agency has been a little reluctant to change,” said Allison, a 15-year TSA veteran.

“We need not work at cross purposes,” Allison said. “Only by working in concert (with industry) can we build tomorrow’s networks today.”

Jane Holl Lute, CEO of SICPA North America and former deputy secretary of the Department of Homeland Security, said there is “a global cyber awakening” as the online world adds new demands to the supply chain.

 “Governments are struggling with these expectations,” Lute said. “It all pivots around the word trust.”

Judith Marks, CEO of Siemens USA, said infrastructure is the “core” of who we are as Americans. Siemens operates 60 U.S. manufacturing centers. “We can’t do that without a competitive U.S. supply chain,” Marks said.

Siemens uses 36,000 suppliers, with 5 million purchasing orders a year with 8 million invoices a year. “To us, we have to leverage infrastructure,” she said. “We want to build more here—and export more as well.”

“The global supply chain is changing as fast as ever,” said Tobin Moore, CEO and co-founder of Optoro, a company specializing in reverse logistics, the science of managing return goods. “People want things now. The supply chain is getting ever more complex.”

He said there is enormous waste in return merchandise, which often ends up in landfills or sold for pennies on the dollar.  More than 4 billion pounds of return goods ended up in landfills last year, Moore said.

“We want to move forward in sustainable commerce,” Moore said.

Lionel van der Walt, president of Cargo Network Services, which works with air cargo companies, said his industry is somewhat stuck in the past. “Unfortunately, we have some players who are stuck in the paper-based processes driven by outdated government regulations,” he said.